What's in the bailout bill? A laundry list called tax relief
The bailout bill, officially titled the American Recovery and Reinvestment Act is a moving target which includes a long list of tax implications including nearly $275 billion in tax relief. A few days ago, the total was $825 billion and is now $819 billion. One key element is a proposed tax credit of $500 per taxpayer or $1,000 per couple, with phase-outs for couples earning $200,000 per year.
While a recent Rasmussen poll says that 42 percent of Americans oppose the bailout, House Ways and Means Committee Chairman Charles B. Rangel (D-NY) says that 95 percent of American workers will benefit. In a press release Rangel said: "The critical state of our economy calls for swift, comprehensive action and this package will provide relief to all communities and all sectors of the American economy. This recovery package will provide tremendous tax relief, health care, and job training benefits for families struggling to make ends meet, while also giving businesses the boost they need to create new jobs. We have also designed specific provisions to help State and local governments fund critical infrastructure projects to improve our roads, schools, bridges and airports, while also maintaining and creating good-paying jobs for working families. This package was developed with strong coordination between the House and Senate leaders, President-elect Obama and his economic team. I look forward to working with all parties involved toward a swift passage."
No Republicans have agreed to vote for the bill, pointing out that much of the money that will be doled out will not have the power to create the promised jobs, and that there are inadequate structures in place to oversee the spending and prevent waste.
While not a lot of detail is known, a long list of items has been put forward, including:
Individual Tax Relief
- "Making Work Pay Credit"
- Expanded Earned Income Tax Credit (EITC)
- Increase in child tax credit
- Simplified education credits w/ $2,500 credit for first four years of higher education expenses (higher income limitations),partially refundable credit (40%)
- Remove repayment requirement on $7,500 first-time home buyer credit for homes purchased after 2008 and before termination of credit(June 30, 2009)
- Grant program for low-income housing
Business Tax Relief
- Bonus depreciation
- 5-year carryback of net operating losses (excluding companies receiving TARP benefits, Fannie Mae, Freddie Mac)
- Extension of increased small business expensing
- Expand work opportunity tax credit for disconnected youth and unemployed, recently discharged veterans
- Prospectively repeal Treasury Section 382 ruling
State and Local Governments
- Allow financial institutions to purchase State and local bonds
- Repeal AMT limits on new private activity bonds
- Taxable bond option for governmental bonds
- School construction bonds
- One year deferral of withholding tax on government contractors
- Provide tax exempt bonds and tax credit bonds to "recovery zones." Usable for a wide array of purposes meant to stimulate economic development, including job training and education. A "recovery zone" would be an area within a State, city, or county that has exhibited high unemployment, foreclosures, or poverty. These bonds would be allocated automatically to states and large municipal governments based on the number of unemployed individuals within that area.
Energy Tax Incentives
- Long-term extension of renewable energy production tax credit
- Temporary election to claim the investment tax credit in lieu of the production tax credit
- Coordination provisions with new grant program for renewable energy projects being designed by the Energy and Commerce Committee
Clean Renewable Energy Bonds
- Qualified Energy Conservation Bonds
- Energy efficiency and conservation tax incentives under sections 25C, 25D, and 48
- Smart energy conservation, energy efficiency, and renewable energy R&D credit
- Refueling property credit expansions
Trade Adjustment Assistance(TAA)
- Updates, modernizes, and expands TAA to cover service workers, and substantially improves and extends coverage to manufacturing workers
- Triples funds for job training
- Encourage UI Modernization
- Continue the Emergency Unemployment Compensation Program
- Increase UI checks by $25/week
Additional Temporary Assistance for Needy Families (TANF)
- Provide additional TANF Contingency Funds to serve needy families' Supplemental Security Income (SSI)
- Provide a one-time additional SSI Payment to Low-Income elderly and disabled recipients Child Support Enforcement Funding
- Restore federal funding for Child Support Enforcement for 2years
COBRA Healthcare for the Unemployed
- Provides temporary subsidies for health insurance coverage to those who have lost their jobs.
- Extends the availability of unsubsidized COBRA coverage for older and tenured workers beyond the 18 months provided under current law
Health Information Technology
- Establishes standards, payment incentives, and privacy protections to encourage the widespread adoption of health information technology. Extends Moratorium on Selected Medicare Regulations through October 1,2009.