OKLAHOMA (OBV) – The Tax Foundation is highlighting Oklahoma’s move to make full expensing permanent as a sterling example of how a state can attract businesses and spur economic growth.
Tennessee’s ongoing tax reform effort to facilitate business growth in the state was the focus of a recent Tax Foundation report.
Gov. Bill Lee recently revealed the “Tennessee Works Tax Reform Act of 2023” – his plan to make Tennessee thrive in the post-pandemic economy. It’s a plan that exceeds simple rate reductions. The Tax Foundation said Lee’s plan make several pro-growth changes to Tennessee’s tax code if enacted and will bring the state progress on business taxes.
The Tax Foundation praised Oklahoma’s to permanent full expensing while discussing various aspects of Lee’s tax reform plan.
Lee’s plan for his state’s franchise and excise tax (the state’s corporate income tax) conforms to IRC Section 168(k), which allows businesses to write off all of its business investments for the year they are incurred, also referred to as full expensing.
“Due to inflation and the time value of money, a dollar in the future is always worth less than a dollar today. Delaying deductions for the cost of business investments means that the real value of the deductions will always be less than the original cost,” the Tax Foundation report states.
Eighteen states conform with the federal treatment of capital investment, but the federal government begins phasing out full expensing this year.
Oklahoma made full expensing permanent in 2022, the first state in the nation to make such a move.
“Tennessee should consider following Oklahoma’s example by keeping this pro-growth policy on the books permanently,” the Tax Foundation states.
Oklahoma transitioned to permanent full expensing when Gov. Kevin Stitt signed HB 3418 into law on May 26, 2022.
The Sooner State’s bold move on full expensing was lauded by the Tax Commission last year as an example of how a state can “maintain their competitiveness in an increasingly mobile economy.”
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