U.S. Senate Votes Down MSCI-Supported Tax Legislation

On Aug. 1, the U.S. Senate voted down a bipartisan tax package that would have reinstated three expired revenue policies that would have helped industrial metals companies. The Tax Relief for American Families and Workers Act, which failed on a 48-44 a procedural vote, would have restored immediate expensing for research and development (R&D) costs, enhanced interest deductibility, and 100 percent accelerated depreciation for capital equipment purchases.

As Connecting the Dots has explained in the past:

• Prior to 2022, manufacturers in the United States could fully deduct their R&D expenses in the year those expenses were incurred. In 2022, however, first-year R&D expensing expired, making R&D investments significantly more costly, particularly for small and medium-sized manufacturers.
• Also in 2022, a new standard took effect limiting the amount of interest manufacturers could deduct on business loans, making it more expensive for them to invest in growth and expansion.
• In 2023, the 100 percent accelerated depreciation, which allows manufacturers to immediately expense the full value of their capital equipment purchases, began phasing down, meaning those vital investments are now more costly.

The Metals Service Center Institute and dozens of other business trade associations supported this legislation. Members of the U.S. House of Representatives had approved the bill on a bipartisan vote earlier this spring. Republican senators opposed the legislation because it also contained a provision that would have expanded the child tax credit for families.

U.S. Senate Majority Leader Charles Schumer (D-N.Y.) initially voted for the measure, but then switched his vote to opposition. That move would allow him to bring the legislation up for another vote later this year if he thinks it has enough support. A more likely scenario, however, is that lawmakers will table consideration of any tax measures until after the November 2024 election and until the 119th Congress convenes in early 2025.

Read more here.