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I'm going to be meeting with my Congressman soon about a modest proposal I have that could be a big deal. My Congressman (Frank Wolf) is a big proponent of telecommuting already, and is quite aware of all the great benefits that it brings.

I want to bring to his attention (or rather his LA's attention) a simple idea that I have, modelled on the famous cubicle depreciation story. As you probably know, the cubicle - that Dilbertesque fate of the white collar worker - was tremendously helped in its adoption by a quirk of tax law. Renovations to offices are depreciated on a 30 year schedule, Cubicles on a much, much shorter time frame. Because cubicles can be depreciated faster, there is an incentive amongst corporations to use them - they realize the same tax benefit over a shorter period of time. Since "revenue" is thus accelerated, it spurs adoption.

My idea is simple - any assets used primarily by a telecommuting worker (defined as someone who regularly works within 1 mile of their primary residence more than 3 days a week) would be depreciated over a period one class shorter than its normal designation. (Per Tax Code Section 147, assets can be depreciated over periods ranging from 18 months to 30 years).

In presenting this proposal to the Congressman, however, I'd like to be able to say that the idea is actually revenue neutral over a 10 year period - the most common measure of scoring a program's cost.

Would this be accurate? In general, is there any budgetary scoring cost for accelerating depreciation?

While I'm most interested in the USA (and specifically CBO scoring), I'm up for foreign precedent as well.

  • What is a LA as in his LA's attention? – gerrit Jan 11 '13 at 21:04
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    His Legislative Assistant. On Capitol Hill, a member of Congress has a Legislative Director who is his top staff member. The LD has several LAs who work for him. That's how most offices are arranged - and getting the attention of the LA means that the advisors to the Congressman now have the idea planted in their heads. – Affable Geek Jan 11 '13 at 21:29
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It doesn't appear that you will be able to claim a revenue neutral score for your proposal here. From the Tax Policy Center (the specific example quoted below relates to bonus depreciation, but the numbers are illustrative):

Accelerating depreciation deductions does not increase the total amount a company can write off for a given investment. Instead, it allows businesses to deduct more of the cost now and less in the future. That reduces their current taxes at the cost of higher taxes later. The Administration estimates that its proposal will reduce revenues by approximately $200 billion in fiscal years 2011 and 2012, but by “only” $30 billion over ten years.

The real crux of the calculation will be the CBO's projection for likely tax code changes over the course of the 10 year period that are relevant to your depreciation calculation. If the rate changes over the same time window that the asset has value remaining to be taxed, then it will improve or hurt your scoring and result in a score that is not revenue neutral.

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