The historic changes in the Tax Cuts and Jobs Act

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by Toni-Anne Barry

These days, it seems like politicians cannot agree about anything. Common Ground profiles members of opposing parties who are working together to advance issues important to hoteliers.

THE ISSUE

The historic changes in the Tax Cuts and Jobs Act (TCJA) directly help American small businesses thrive, but the legislation is not without error. Unfortunately, one provision that was intended to increase the ability of small business owners to write off their expenses did the exact opposite, and made these write-offs more restrictive. This error specifically affects investments in qualified improvement property (QIP), which are defined as any improvements to the interior of a commercial building, with some exceptions.

Prior to the TCJA, small businesses were eligible for 50-percent bonus depreciation over a 15-year recovery period. The goal of the TCJA was to bring the bonus depreciation up to 100 percent on all QIP investments. Instead, the bill increased the recovery period to 39 years and did not implement full bonus depreciation. For small business owners like AAHOA Members, this makes renovation projects more costly and disincentives investment.

COMMON GROUND

Senators Pat Toomey (R-PA) and Doug Jones (D-AL) introduced the Restoring Investment in Improvements Act to address this issue. The legislation would reduce cost recovery from a 39-year period to a 15-year period and would make these investments eligible for 100-percent bonus depreciation. With this error fixed, small business owners are better able to make improvements and updates to their properties to stay competitive in their markets. Representatives Jackie Walorski (R-IN) and Jimmy Panetta (D-CA) introduced this legislation in the House.

Sen. Pat Toomey (R-PA)

First Elected: 2011

Committees: Finance; Budget; and Banking, Housing and Urban Affairs

“As a former restaurant owner, I know keeping a small business alive is always a challenge. The federal tax code should not make it more difficult for a restaurateur or a retailer. Capital invested in a company should be fully deductible at the time of the investment. This helps make the investment affordable. Our simple, bipartisan fix recognizes the economic benefits from immediate expensing and will help grow the economy and create jobs.”

Sen. Doug Jones (D-AL)

First Elected: 2017

Committees: Aging; Armed Services; Banking, Housing and Urban Affairs; and Health, Education, Labor and Pensions

“Making sure our local small businesses can invest in themselves is critical for the economic success of Alabama’s communities. That’s why this bipartisan legislation is so important: to make sure the tax code works as intended, and restaurants, retailers, and other businesses can make the improvements they need to make their stores competitive, vibrant, and safe.”

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