Tax News

CCH (cch.taxgroup.com) reports:

  The House Ways and Means Committee plans to consider economic stimulus legislation on January 22 that provides approximately $275 billion in individual and business tax relief, lawmakers said on January 15. The two-year tax bill is part of a larger stimulus plan called the American Recovery and Reinvestment Act of 2009, which would also provide an additional $550 billion in federal spending designed to create jobs and boost American productivity. Lawmakers intend to have the legislation ready for President-elect Obama's signature by mid-February.

  Ways and Means Committee Chairman Charles B. Rangel's, D-N.Y., office released a summary of the proposed legislation that includes a package of tax incentives for employment, education, housing, business, state and local governments, energy, trade and health care. Although details were not available, the outline includes expanded child and earned income tax credits, simplified education credits, and first-time homebuyer credits for housing purchased before June 30, 2009. For businesses, the legislation includes provisions to provide bonus depreciation, increased small business expensing, and work opportunity tax credits. The legislation would also provide a five-year carryback of net operating losses for certain companies and repeal the alternative minimum tax limits on new private activity bonds.

  The legislation would also provide a one-year deferral of a 3-percent withholding tax on government contractors who have unpaid federal tax obligations and would prospectively repeal an IRS ruling that allows banks to use the losses of companies they acquire to cut their own tax liability. The measure also includes a package of energy tax incentives, including an extension of renewable energy production tax credits, clean renewable energy bonds, conservation bonds and research and development tax credits.

  In a written statement, President-elect Obama commended the House for acting quickly on the economic recovery package. "This plan is a significant down payment on our most urgent challenges," Obama stated. The president-elect said the economic package will preserve or create 3 million new jobs and will provide tax relief to families and businesses and needed spending on health care, education and energy. The measure also contains "strict, independent oversight" on all expenditures, Obama noted.

  However, House Minority Leader John Boehner, R-Ohio, expressed disappointment with the Democratic tax and spending priorities, saying many of the provisions were recycled ideas that have little to do with economic stimulus. He said the measure will not create jobs, and that GOP lawmakers would offer their own ideas to Obama. Ways and Means member Kevin Brady, R-Tex., said Republican lawmakers were not involved in the negotiations to determine the contents of the economic stimulus bill.

  By Stephen K. Cooper and Paula Cruickshank, CCH News Staff

American Recovery and Reinvestment Act of 2009

Discussion Draft of the Appropriations Committee Report on the American Recovery and Reinvestment Act of 2009

Summary of the American Recovery and Reinvestment Act of 2009

Ways and Means Release: Chairman Rangel Outlines Economic Recovery Package