Republicans blocked the Senate on Thursday from taking up a House-passed tax bill that includes improvements to valuable expensing provisions used by farmers, as well as an expansion of the child tax credit.
But the top Republican on the Senate Finance Committee, Mike Crapo, told leaders of farmer cooperatives that the legislation could come up again in a lame-duck session after the Nov. 5 elections.
The 48-44 Senate vote Thursday afternoon to advance the bill fell far short of the 60 votes needed to move forward on the legislation.
The bill, which passed the House 357-70 in January, would restore 100% bonus depreciation through 2025 and expand the existing Section 179 expensing allowance.
As structured now, the existing Section 179 allowance allows businesses to write off up to $1.16 million of the cost of equipment and software for 2023, with the limit phased down dollar for dollar as spending exceeds $2.9 million. The bill would raise the expensing limit to $1.29 million and increase the phaseout threshold to $3.22 million, with both indexed to inflation.
The bonus depreciation provision, which allows a business to immediately write off the cost of equipment or buildings, is scheduled to be phased out under the Tax Cuts and Jobs Act that was enacted in 2017: The provision dropped from 100% to 80% of the purchase price in 2023 and dropped to 60% this year. It is due to drop to 40% in 2025 and 20% in 2026 before ending in 2027.
The bill also restores the value of a deduction for research and development expenses that was cut in 2022.
Speaking to the National Council of Farmer Cooperatives on Thursday morning, Crapo said Republicans want restrictions on the expanded child tax credit to keep it from discouraging recipients from working.
"My hope is that if we succeed today that they [Democrats] will realize they can't get it done without negotiating with us, and it could become a part of that lame-duck session," Crapo said.
Some Republicans also have taken the position that the tax issues should be punted until next year, when other provisions of the TCJA are set to expire, including cuts in individual tax rates and a 20% deduction for pass-through business income known as Section 199A.
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Senate Minority Leader Mitch McConnell, R-Ky., complained that Democratic leaders forced the test vote Thursday. The bill “isn’t ready for prime time” and needed “serious revisions in order to earn 60 votes here in the Senate. We don’t need a vote today to tell us that’s still the case.”
Only three Republicans voted for the measure – Markwayne Mullin of Oklahoma, Rick Scott of Florida and Josh Hawley of Missouri. Independents Joe Manchin of West Virginia and Bernie Sanders of Vermont voted against it as well. Senate Majority Leader Chuck Schumer, D-N.Y., switched his vote to no in a procedural move that allows him to bring up the legislation later.
Schumer acknowledged ahead of the cloture vote that it was intended to force Republicans to go on the record voting again popular tax provisions. He predicted they would hear from voters about the legislation during the August recess.
"It's a shame they put politics ahead of helping the American people," he said of Republican colleagues.
Senate Finance Chairman Ron Wyden, an Oregon Democrat who negotiated the bill with House Ways and Means Chairman Jason Smith, R-Mo., said Senate Republicans turned down his offers to compromise and tried instead to put off any votes on the legislation. Borrowing a basketball metaphor, he said Republicans have employed “the old four-corners offense, just stall and drain the clock.”
He said that passing the provisions are going “to get a lot harder” in the context of the far more multi-trillion dollar extension of the Tax Cuts and Jobs Act.
The Association of Equipment Manufacturers lamented the lack of action on the bill.
“At a time when our global competitors aggressively pursue policies that offer generous preferential tax treatments, we are forced to compete with one hand tied behind our backs,” said Kip Eideberg, AEM’s senior vice president of government and industry relations.
