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THE SENATE STIMULUS PINATA

February 01, 2008

The House "stimulus" package had two big tax incentives for business: a one-year increase in the "Section 179 deduction" to $250,000 and a one-year "bonus depreciation" provision. As the Worlds Greatest Distributive Body, the Senate piled on the goodies. The Senate Finance Bill has the following incentive provisions

- An increase in the Section 179 deduction to $250,000 for "property placed in service after January 29, 2007 in taxable years ending after that date." That differs from the house bill, which applies to taxable years beginning after December 31, 2007. That effective date would be a bummer for companies with January 31 year ends, as they would have only had Wednesday and Thursday of this week to use the increased deduction.

- A bonus depreciation provision that splits the 50% bonus depreciation amount 25% each to 2008 and 2009. The Ways and Means bill allows the whole amount in 2008.

The Senate Finance bill has a bunch of items that the House left out entirely:

- A five-year net operating loss carryback, instead of the usual two-year carryback period.

- Extension of all of the household energy-efficiency credits tat expired at the end of 2007 through 2009.

- Extension of some renewable energy production credit and refined and Indian coal credits. Is Indian coal is more stimulative than white man coal?

- Extension of some other energy-related deductions expiring this year through 2009, including the energy-efficient home credit.

As Senate Rules allow for more floor amendments, look for more Senators to take a whack at the pinata.

Creative Commons/Flickr image by Peasap

Links:

Senate Finance Bill
Finance Committee Staff Explanation

TaxVox: "Washington’s Business Stimulus: Off Target"
Tax Policy Blog: Stimulus Bill Turning Into A Christmas Tree

Tags: stimulus.tax policy.

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