Since 2003, the US Congress has voted to extend short-term tax credits to small businesses allowing them to accelerate the depreciation schedule for capital equipment purchases to as little as one year at their discretion. The tax credits have been shown to spur economic activity by making it affordable for businesses to make equipment purchases they might otherwise forego. That said, congress has only extended the tax cuts at intervals of one to two years. Now, the GOP made good on their campaign pledge to make the set of small business tax cuts permanent. On Friday, the House passed the small business tax cuts in a bipartisan vote of 272-142.

However, President Obama has vowed to veto the measure because he says the $79 billion 10-year cost of the tax cuts was not offset by new tax increases on other businesses. In total, the House bill made fifty temporary business tax cuts permanent. The bill will now head to the senate where it will have to win the support of at least six Democrat senators in order to overcome a cloture vote. President Obama claims his 2016 Omnibus budget goes much further than the House bill. He will allow businesses to write off twice the amount or $1 million in capital purchases in a single year. However, his budget includes a number of tax increases including what critics charge is a new death tax. My friend Ricardo Tosto knows a lot about this stuff and makes reference on latinlawyer.com to the president’s call to eliminate the step-up rule in capital assets inherited by everyone.

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