Lubbock Times

WASHINGTON, D.C. – Today, the final Tax Relief for American Families and Workers Act was announced by Ways and Means Chairman Jason Smith (R-MO) and Senate Finance Chairman Ron Wyden (D-OR). This legislation, a result of bipartisan and bicameral negotiations, includes Chairman Arrington's Accelerate Long-term Investment Growth Now (ALIGN) Act. The bill aims to allow businesses to continue immediately expensing new business equipment, a provision that was initially included in the 2017 Tax Cuts and Jobs Act.

In a statement, Rep. Arrington emphasized the significance of allowing businesses to deduct the full cost of new investments, equipment, and machinery, stating, "There's no bigger incentive in the tax code for job creation and economic expansion." He further explained that full expensing was crucial to the economic boom experienced before the pandemic. The ALIGN Act is expected to lower the cost of capital, simplify the tax code, and encourage businesses to make vital investments, bring workers back, onshore manufacturing capabilities, and increase production. The legislation is anticipated to lead to stronger growth, more jobs, increased productivity, and higher wages for working families.

The background of the legislation highlights the importance of full expensing. This provision, which allows businesses to deduct the full cost of new investments in the year they were made, was a key component of the Tax Cuts and Jobs Act. In 2023, the provision began to phase down from a 100% deduction to 80%, reducing by 20% annually until it is fully phased out in 2027.

The National Association of Manufacturers has identified higher tax burdens on manufacturing activities as a significant barrier to workforce growth, investment in new equipment, and facility expansion. It is worth noting that full expensing has been present in the tax code for the majority of the past 23 years, under both Democratic and Republican presidential administrations.

According to the Tax Foundation, making full expensing a permanent provision would not only increase long-term economic output but also contribute to the creation of tens of thousands of jobs.

With the inclusion of Chairman Arrington's ALIGN Act in the final Tax Relief for American Families and Workers Act, businesses can expect to benefit from the continuation of full expensing for new business equipment. The legislation acknowledges the importance of this provision in supporting job creators and stimulating economic growth.