Tax reform for investment and jobs

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Fixing a quirk in the U.S. tax code would let businesses add new jobs and increase economic growth immediately. The remedy, known to economists as “expensing,” lets businesses deduct from their taxable income the full value of all capital expenses incurred that year.

Take a local business that wants to expand by hiring 20 new employees. They know they can pay the new employee salaries, but can they afford to expand their office space and buy the new equipment? The current tax code artificially makes the investment in new office space more expensive by not letting the business deduct the full cost of the expansion.

When the U.S. tax code unnecessarily raises the cost of investment, businesses invest less than they would otherwise. This anti-investment bias is inefficient and hurts the U.S. economy and American workers. Expensing restores the full deduction and makes investment in the U.S. more attractive.

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