Sep 21, 2017

Ditching Full & Immediate Expensing for Lower Rates Is the Best Way to Help Americans

Post by Freedom Partners

Arlington, VA – Freedom Partners Chamber of Commerce today released a new report highlighting how the best way to ensure U.S. businesses can be more competitive and boost economic growth through tax reform is by removing full and immediate expensing (FAIE) from tax reform proposals and using that savings to lower business rates further across the board.

History proves that cutting tax rates and reforming the code is a win for everyone – more jobs, higher wages, bigger paychecks and greater financial security for Americans to save and plan for the future.

FAIE would allow companies to deduct the full cost of capital investments in the same year the investments are made, rather than deducting that cost over a number of years under the current system of depreciation.

Removing FAIE from consideration for tax reform would allow Congress to instead use that $2 trillion to lower corporate tax rates even further – to 20% or even lower – and generate far more reliable economic growth than keeping it.


Freedom Partners Vice President of Policy Nathan Nascimento issued the following statement:

“The best way to help millions of hardworking Americans and bring jobs and investment back to the United States is to lower business rates as much as possible. Any provision that stands in the way of lower rates would undermine our competitiveness and jeopardize the jobs, economic growth and opportunity we’d otherwise achieve.

“The Trump administration has put forth a positive vision for tax reform that would unleash America’s competitiveness and jumpstart the economy. We urge Congress to follow its lead and show that America is serious about winning back the jobs and businesses we’ve been pushing away for too long.”

Currently, the U.S. tax code is rigged against average Americans – set up to benefit well-connected special interests who can afford to pay the lobbyists, consults and lawyers, while average Americans lose out. America also has the highest corporate tax rate in the developed world, undermining our competitiveness in the global economy. Unless we can lower corporate tax rates significantly – below the global average – we’ll continue to see jobs and opportunity leave the United States. The $2 trillion for FAIE should instead be used to lower rates well below the global average of approximately 22.5-percent to deliver economic growth and improve the lives of all Americans.

Topline Takeaways

  • Corporate tax rate reductions have consistently spurred growth, created jobs, and put more money in the pockets of American families.
  • FAIE costs more than $2 trillion over 10 years. For every $125 billion in savings, the corporate tax rate could be lowered an additional full percentage point.
  • Removing FAIE would allow Congress to get corporate rates well below the global average of 22.5-percent.
  • Furthermore, including FAIE could be the critical difference between remaining above the global average of 22.5-percent or getting below it – significantly undermining the competitive advantage the United States would have over other countries in attracting jobs and investment.
  • If FAIE is adopted at the expense of lower tax rates, capital will still be diverted to pay high tax bills and unavailable to make new investments that would benefit from FAIE.
  • From 2002 to 2003, when Congress increased the cap on expensing from $25,000 to $100,000, a smaller percentage of small businesses actually claimed the deduction despite it being made substantially more generous.