It’s difficult for entrepreneurs to make critical investments into their companies without attracting unwanted scrutiny from the Internal Revenue Service (IRS). And by all indications, this scrutiny will only increase over time. While companies are currently allowed to fully deduct certain investments (short-lived assets) from revenues thanks to the 2017 Tax Cuts and Jobs Act (TCJA), this pro-growth policy will begin to phase out starting in 2022. Some policymakers want to make the tax code even more onerous by nixing current rules that allow energy businesses to immediately deduct 70 percent of intangible drilling costs from their earnings. Ending these deductions would stymie growth in the energy sector, spooking investors and leading to higher prices at a time when gas prices are already skyrocketing. Lawmakers should push for permanent, immediate expensing across all sectors, rather than punishing businesses they don’t like.
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