What kind of tax cuts would businesses get?
The package includes about $50 billion in tax cuts for corporations: • 50% bonus depreciation – This will allow all businesses to immediately write off 50 percent of the purchase cost of new plants and other equipment. It is called “bonus” depreciation, as you get to accelerate your depreciation in a shorter time frame. • Small Business Expensing (Section 179) is doubled from its current rate of $128,000/$510,000 to $250,000/$800,000 for 2008. This deals with how small businesses write off equipment purchases. The goal of doubling Section 179 is to allow small businesses to more easily afford large capital expenses such as store updates, or new equipment and technology. Under Section 179 of the Internal Revenue Code (IRC), business taxpayers have the option of deducting (or expensing) the cost of qualified assets (or property) they purchase in the year when the assets are placed in service, within certain limits. In 2007, the maximum expensing allowance is $112,000 for firms. Phase-out
