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ADA, business groups urge Congress to extend capital investment incentives

Washington—The American Dental Association joined 76 general industry and trade organizations in urging Congress to extend bonus depreciation and small business expensing tax provisions.

“Congress should extend bonus depreciation and the increased Section 179 levels through at least Jan. 1, 2013, to help create a favorable climate for businesses to invest in more productive capital assets,” said the Oct. 12 letter addressed to the bipartisan House and Senate leadership.

Both tax provisions are important to dentists, and the ADA is the lone health professional organization signing the letter. Other signers represent business and industrial interests and all 77 said they “strongly support extending 100 percent bonus depreciation and the increased Internal Revenue Code Section 179 expensing levels.”

Under the bonus depreciation law, businesses of all sizes can write off 100 percent of the cost of such new capital assets as dental or medical equipment or machinery purchased and placed in service in 2011. Under Sec. 179, small companies can expense used as well as new equipment purchases up to $500,000 provided that total 2011 purchases do not exceed $2 million. On Jan. 1, 2012, the depreciation bonus will fall to 50 percent and the Sec. 179 expensing level will fall to $125,000 with a $500,000 phase out cap.

“These historic capital investment incentives, which enjoy bipartisan support, have had a positive impact and incentivized business purchasing and job creation,” said the letter addressed to House Speaker John Boehner and Democratic Leader Nancy Pelosi and Senate Majority Leader Harry Reid and Republican Leader Mitch McConnell. “However, due to continuing economic uncertainty and slow recovery in certain sections (e.g. construction), many businesses have not been able to take advantage of these laws.”

The letter also recommends depreciation bonus bill language “holding the tax incentive harmless from long-term accounting methods” and says Congress should allow companies eligible for bonus depreciation to instead claim a portion of their unused Alternative Minimum Tax (AMT) credits. “These enhancements will help ensure the greatest possible benefit to the most companies,” the letter said.

The sun sets Dec. 31 on various tax provisions and the Joint Select Committee on Deficit Reduction is considering tax-related recommendations. But Congress is not otherwise engaged in a comprehensive or substantive tax policy debate.