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1 Erica York, et al., The Economic, Revenue, and Distributional Effects of Permanent 100 Percent Bonus Depreciation 1 (2022)

handle is hein.taxfoundation/ecrnuaddl0001 and id is 1 raw text is: The Economic, Revenue, and r* Distributional Effects of Permanent 100 Percent Bonus Depreciation FISCA L FACT Erica York Senior Economist Garrett Watson Senior Policy Analyst Huaqun Li Senior Economist Cody Kallen Resident Fellow No. 798 Daniel Bunn Executive Vice President Aug. 2022 Key Findings • 100 percent bonus depreciation allows firms an immediate tax deduction for investments in qualifying short-lived assets. The phaseout of 100 percent bonus depreciation, scheduled to take place after the end of 2022, will increase the after-tax cost of investment in the United States. • Preventing the phaseout and making 100 percent bonus depreciation a permanent feature of the U.S. tax code is crucial in the effort to increase business investment and create better opportunities for workers. Research indicates past instances of bonus depreciation have boosted capital accumulation and employment opportunities. • Permanent 100 percent bonus depreciation would increase long-run economic output by 0.4 percent, the capital stock by 0.7 percent, and employment by 73,000 full-time equivalent jobs. Over the 10-year budget window, permanent bonus depreciation would reduce federal revenue by $400 billion. • A permanent expansion of 100 percent bonus depreciation would support business investment, capital formation, and economic output over the long term while creating more opportunities for workers. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2022 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org