S.2056 - Cost Recovery and Expensing Acceleration to Transform the Economy and Jumpstart Opportunities for Businesses and Startups Act; CREATE JOBS Act (119th Congress)
Summary
S.2056, the CREATE JOBS Act, aims to stimulate economic activity by amending the Internal Revenue Code of 1986. The bill introduces permanent full expensing for qualified property, adjusts depreciation for residential and nonresidential real property using a neutral cost recovery method, and eliminates the amortization of research and experimental expenditures.
These changes are intended to incentivize investment, particularly in qualified property and research, by allowing immediate tax deductions. The bill also seeks to adjust depreciation deductions to account for inflation, providing a more accurate reflection of asset value over time.
The Act's provisions are designed to encourage businesses and startups to invest in capital assets and innovation, potentially leading to economic growth and job creation.
Expected Effects
The bill's passage would likely lead to increased investment in qualified property due to the immediate tax deductions. The neutral cost recovery depreciation adjustment could stabilize real estate investments by accounting for inflation.
Eliminating the amortization of research and experimental expenditures could spur innovation and development by making these activities more immediately profitable for tax purposes.
These changes could result in a short-term decrease in government revenue due to increased deductions, but proponents hope for long-term economic growth that offsets this.
Potential Benefits 4/5
- Immediate tax deductions for investments in qualified property, encouraging businesses to invest in new equipment and facilities.
- Inflation-adjusted depreciation for real estate, providing a more accurate reflection of asset value and potentially stabilizing the real estate market.
- Elimination of amortization for research and experimental expenditures, incentivizing innovation and technological advancement.
- Simplified tax code through the removal of complex amortization schedules.
- Potential for increased economic growth and job creation due to increased investment and innovation.
Most Benefited Areas:
Potential Disadvantages
- Potential short-term decrease in government revenue due to increased tax deductions.
- The neutral cost recovery depreciation adjustment could add complexity to tax calculations for real estate owners.
- The benefits of the bill may disproportionately favor large corporations and wealthy investors.
- Possible inflationary pressure due to increased investment and spending.
- Risk that some businesses may exploit the immediate expensing provisions for short-term gains without long-term investment.
Most Disadvantaged Areas:
Constitutional Alignment 4/5
The bill primarily deals with taxation, which falls under the purview of Congress as outlined in Article I, Section 8, Clause 1 of the Constitution, granting Congress the power to lay and collect taxes, duties, imposts, and excises. The bill's aim to promote economic growth and general welfare aligns with the broader goals stated in the Preamble of the Constitution.
However, the specific provisions of the bill, such as the permanent full expensing for qualified property and the neutral cost recovery depreciation adjustment, do not directly implicate any specific constitutional rights or limitations. The bill's impact on different segments of the population could raise questions of equal protection under the Fifth Amendment, but the bill itself does not explicitly discriminate.
Overall, the bill appears to be within the constitutional authority of Congress to legislate on matters of taxation and economic policy.
Impact Assessment: Things You Care About
This action has been evaluated across 19 key areas that matter to citizens. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).