Overview
Title
To amend the Internal Revenue Code of 1986 to permanently extend the allowance for depreciation, amortization, or depletion for purposes of determining the income limitation on the deduction for business interest.
ELI5 AI
H.R. 1347 is a plan that helps businesses by letting them keep using a special money-saving trick called depreciation forever. This means they can keep more money when they pay their taxes, starting from 2022.
Summary AI
H.R. 1347, also known as the American Investment in Manufacturing and Main Street Act (AIMM Act), is a bill introduced to modify the Internal Revenue Code of 1986. The bill aims to make permanent the allowance for depreciation, amortization, or depletion when calculating the income limit for business interest deductions. This change is intended to apply to tax years starting after December 31, 2021. The proposal was introduced by Mr. Smith of Nebraska and others, and it has been referred to the Committee on Ways and Means for consideration.
Published
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AnalysisAI
The proposed legislation, titled "American Investment in Manufacturing and Main Street Act" (AIMM Act), aims to amend the Internal Revenue Code of 1986 by permanently extending the allowance for depreciation, amortization, or depletion for determining the income limitation on the deduction for business interest. Essentially, this bill seeks to provide businesses with a long-standing option to include certain financial expenses when calculating their interest deductions, potentially influencing their taxable income years after 2021.
General Summary of the Bill
The AIMM Act intends to alter current tax codes to allow businesses to continue factoring in depreciation, amortization, and depletion costs when determining limits on their interest deductions. This was previously temporary under the existing tax law, and the bill seeks to make it a permanent feature, retroactively effective for tax years beginning after December 31, 2021.
Significant Issues
One notable concern with this bill is the lack of analysis regarding its impact on federal revenue or economic consequences. By extending this allowance permanently, the government might lose out on potentially substantial tax revenues without a clear understanding of the implications. Moreover, since the amendment is retroactively applied, businesses that have already submitted their taxes for the specified periods may face compliance challenges or confusion.
Additionally, the bill does not specify which industries or sectors could benefit the most from this change. This lack of specification raises concerns about whether certain sectors might gain a disproportionate advantage, fostering favoritism within the tax structure.
Furthermore, the bill employs technical tax language, which may be difficult for the general public to comprehend, potentially limiting public engagement and scrutiny.
Impact on the Public Broadly
The broader public might witness shifts in how businesses manage their financial interests and taxation. If businesses can reduce their taxable income through lowered interest payments, this could influence pricing, investment, and employment strategies. While some argue that such tax benefits might lead to business growth and job creation, critics argue these could lessen tax revenue for public services.
Impact on Specific Stakeholders
Businesses and Industries
Businesses will likely view the bill positively, particularly those heavily engaged in activities involving depreciation and amortization, such as manufacturing and real estate sectors. The permanent allowance can provide more predictability and consistency in financial planning and tax calculations.
Tax Professionals and Advisors
Tax professionals may have to navigate the retroactive application of this bill. Those advising businesses that have already filed taxes for years post-2021 may need to re-evaluate returns, potentially incurring additional administrative costs and compliance checks.
Government and Public Services
The government potentially stands to lose significant tax revenue as businesses capitalize on the deductions. Over time, this might affect the funding available for public services unless offset by other economic benefits such as increased corporate investments or job creation.
In summary, the AIMM Act proposes a noteworthy amendment to tax law that could provide substantial financial benefits to businesses, posing both potential opportunities and challenges in terms of compliance and economic impact. The bill, while addressing business interests, underscores the ongoing debate between maintaining competitive business environments and ensuring equitable tax contributions to fund public services.
Issues
The permanent extension of the allowance for depreciation, amortization, or depletion, as indicated in Section 2, lacks an analysis of its impact on federal revenue or potential economic consequences, raising concerns about the long-term fiscal impact.
The retroactive application of the amendment to taxable years beginning after December 31, 2021, as mentioned in Section 2, may create compliance challenges or confusion for businesses that have already filed their taxes for those periods.
There is no specific information on which industries or sectors might benefit the most from this amendment in Section 2, which raises concerns about potential favoritism towards certain businesses or industries.
The overall policy objectives or intended outcomes of permanently extending this allowance are not clear in Section 2, making it difficult to assess the amendment's long-term economic benefits or impact on businesses.
Section 2 uses technical tax language that might be complex for individuals without a tax background to understand, potentially limiting public engagement or scrutiny.
Section 1 contains only the short title of the bill and does not provide details about the spending or specific allocations, making it impossible to audit for wasteful spending, favoritism, or complexity.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the act provides its short title, stating that it can be referred to as either the “American Investment in Manufacturing and Main Street Act” or the “AIMM Act.”
2. Permanent extension of allowance for depreciation, amortization, or depletion in determining the limitation on business interest Read Opens in new tab
Summary AI
The bill permanently allows businesses to include depreciation, amortization, or depletion costs when calculating limits on business interest, starting from taxable years after December 31, 2021.