Pres. Bush recently proposed doubling the amount small firms can write off annually for spending on vehicles, computers and other big-ticket items. That would mean a potential write off of up to $200,000. It’s meant to entice U.S. small businesses to spend more, while reinvesting the tax savings back into their companies.
Supporters of the tax proposal are encouraged by what happened when Section 179 of the Internal Revenue Service code was last modified. In 2003 Congress quadrupled the annual write-off to $100,000. Many small businesses responded by spending more.
Another part of Bush’s proposal addresses the spending cap. He urged Congress to make the expensing change permanent, instead of letting it expire at the end of next year. This would allow small business owners to plan for the future and continue taking a much-needed deduction in the process.