Senator Ted Cruz (R-TX) recently reintroduced the Cost Recovery and Expensing Acceleration to Transform the Economy and Jumpstart Opportunities for Businesses and Startups (CREATE JOBS) Act. This isn’t just another piece of legislation; it’s a strategic move to fundamentally reorient the U.S. tax code for robust economic growth, increased competitiveness, and job creation. By making crucial business investment incentives permanent and introducing an innovative approach to structure depreciation, the Act aims to supercharge the American economy in a fiscally responsible way.
What the CREATE JOBS Act Means for Your Business
The CREATE JOBS Act targets three core areas vital for business expansion and innovation:
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Permanent 100% Bonus Depreciation for Equipment: Imagine buying new machinery or software and deducting its full cost immediately. That’s what 100% bonus depreciation allows. The 2017 Tax Cuts and Jobs Act (TCJA) temporarily offered this, but it began phasing out in 2023 and will hit zero by 2027. This Act makes it permanent and retroactive to the end of 2022. This change isn’t just about a tax break; it’s about providing businesses with immediate cash flow, reducing the cost of new investments, and fostering long-term strategic planning without the uncertainty of expiring provisions. It means more businesses can afford to upgrade, expand, and innovate, making U.S. industry more competitive.
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Neutral Cost Recovery for Structures (NCRS): Investing in buildings and structures is a huge, long-term commitment. Current tax rules require these investments to be depreciated over decades, often eroding the real value of deductions due to inflation. The CREATE JOBS Act introduces NCRS, a system that is economically equivalent to full and immediate expensing for structures, but with a significantly lower revenue impact over the next decade. NCRS ensures that the real value of deductions for new and existing buildings is maintained over time. This incentivizes crucial investments in factories, offices, and commercial spaces, removing a major disincentive for long-term physical infrastructure development.
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Immediate Expensing for Research & Development (R&D): Innovation fuels progress. Historically, businesses could immediately deduct their R&D costs. However, a change in the TCJA mandated that these costs be amortized over five or 15 years. The CREATE JOBS Act would restore immediate R&D expensing, making it retroactive to 2021. This change dramatically lowers the after-tax cost of innovation, encouraging companies to invest more in cutting-edge research and development. It’s a critical step for maintaining America’s leadership in technology and science, and ensures that U.S. businesses can compete effectively with global rivals who often offer similar, generous R&D incentives.
The Economic Upside: A Powerful Growth Engine
The projections from the Tax Foundation’s General Equilibrium Model paint a compelling picture of the CREATE JOBS Act’s potential:
- 2.9% growth in the long-run U.S. economy.
- 5.3% expansion in the nation’s capital stock.
- 2.3% boost in wages for American workers.
- The creation of over 775,000 new full-time equivalent jobs.
These are substantial numbers, highlighting how fundamental tax reforms can translate into tangible benefits for every American. While the retroactive elements contribute to the bill’s initial cost, they don’t drive the long-term growth, which is instead powered by the permanence of these pro-investment policies.
How It Stacks Up Against Other Tax Proposals
The CREATE JOBS Act distinguishes itself from other major tax legislation currently under consideration:
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Compared to a Full TCJA Permanent Extension: Making the entire TCJA permanent would certainly spur growth (estimated 1.1% economic growth, 847,000 jobs). However, its conventional cost is projected at a staggering $4.5 trillion from 2025-2034.
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Compared to the House-Passed “One Big, Beautiful Bill Act” (OBBBA): The OBBBA offers 0.8% long-run economic growth and 983,000 jobs, with a conventional cost of $2.6 trillion. Crucially, the OBBBA’s extensions for bonus depreciation, R&D expensing, and even select structure expensing are temporary. Temporary policies, by their nature, don’t foster the same level of long-term investment or contribute as effectively to sustained economic growth.
The CREATE JOBS Act takes a targeted approach, focusing on the most cost-effective tax reforms – permanent expensing and NCRS – to deliver significant growth in a relatively fiscally responsible manner. While policymakers could further reduce the fiscal impact by removing retroactive extensions, the core benefit lies in creating a stable and predictable tax environment that encourages businesses to invest, innovate, and expand right here in the USA.
What do you think is the most impactful aspect of the CREATE JOBS Act for businesses in the U.S.?