Tax Break for Small Businesses
May 30, 2014
Ways & Means Solidifies Depreciation Tax Break for Businesses; Personal Income Up & Consumer Spending Down in April
On the Hill
- The House of Representatives voted 219-189 in favor of an amendment which blocks the federal government from interfering with states that permit the use of medical marijuana. The vote was part of the funding debate on the DOJ’s budget, and this amendment was introduced by Rep. Dana Rohrabacher (R-CA).
- The House Ways and Means Committee voted to make permanent a depreciation tax break for businesses. The policy would allow businesses to deduct 50% of many capital purchases up front, thus encouraging more private investment expenditures, but it would also account for a government revenue reduction of $300 billion over the next decade. Combined with other tax breaks that the committee has chosen for permanent extension, the cost to the government would be almost $1 trillion. The proposal will now be considered by the full House of Representatives.
- The House Appropriations Committee voted to offer a one-year waiver to school districts that allows them to opt out of the improved nutritional standards promoted by First Lade Michelle Obama. The standards were considered for inclusion in the Agriculture Department and Food and Drug Administration’s $142.5 billion farm and food safety budget. Opponents of the plan claim that school districts need more time to plan for the changes in nutritional standards.
- Personal income increased 0.3% in April, while consumer spending was down 0.1% from March. Growth in wages and salaries slowed to 0.2% from 0.6% in the previous month, and spending on durable goods like cars fell 0.5%.
- The Bank of England and European Central Bank are advocating for a revived market for toxic assets, which involves securitizing risky loans and selling them as bond-like instruments. The sale of such securities was a contributing factor to the collapse of the U.S. mortgage market in the 2008 financial crisis. The two banks hope that a revived market for these bonds, which has been inactive since 2008, will boost lending to European businesses and households.