H.R.354 - Small Business Growth Act (119th Congress)
Summary
H.R. 354, the Small Business Growth Act, proposes amendments to Section 179(b) of the Internal Revenue Code of 1986. The bill aims to increase the limitations on expensing depreciable business assets for small businesses. It was introduced in the House of Representatives on January 13, 2025, and referred to the Committee on Ways and Means.
Expected Effects
The primary effect of this bill, if enacted, would be to allow small businesses to deduct a larger amount of their capital investments immediately, rather than depreciating them over time. This could incentivize investment in equipment and other assets. The bill also adjusts the inflation adjustment mechanism for these limits.
Potential Benefits
- Increased Investment: Small businesses may be more likely to invest in new equipment and technology due to the higher expensing limits.
- Simplified Tax Process: Expensing provides a simpler tax treatment compared to depreciation, reducing administrative burdens.
- Economic Stimulus: Increased investment can lead to economic growth and job creation, particularly within the small business sector.
- Improved Cash Flow: Businesses can retain more cash upfront due to larger deductions, improving their financial flexibility.
- Modernization: Encourages businesses to upgrade equipment, enhancing productivity and competitiveness.
Most Benefited Areas:
Potential Disadvantages
- Potential for Abuse: Higher expensing limits could be exploited through aggressive tax planning.
- Revenue Loss: The increased deductions could reduce federal tax revenue, potentially increasing the national debt.
- Complexity: The inflation adjustment mechanism, while intended to maintain the real value of the deduction, can add complexity to the tax code.
- Uneven Distribution: The benefits may disproportionately favor capital-intensive small businesses over service-based businesses.
- Delayed Tax Revenue: While businesses benefit from upfront deductions, the government experiences a delay in tax revenue collection.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill aims to promote the general welfare by supporting small businesses, which aligns with the Constitution's preamble. The specific details of tax law are generally left to the discretion of Congress, provided they do not violate other constitutional protections.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).