[Update July 2010] – This bill – HR4213 – was passed by Congress and is expected to signed into law by the President. The bill, also known as the American Jobs and Closing Loopholes Act of 2010 originally contained a provision to extend unemployment benefits, as well as a number of expiring tax provisions, which passed through the House on May 28, 2010. The approved bill was revised to only contain an extension for unemployment benefits, in order to secure passage through Congress. Details of the unemployment benefits extension can be found here.
[Update] To appease Senate members concerned about the rising cost of this bill, Democrats have scaled back unemployment benefits and Medicare physician reimbursement measures. The revised jobs bill eliminates a $25 weekly supplement for the jobless that had been part of the last year’s stimulus act. Those currently receiving the supplement in their unemployment benefits check will continue to do so until they exhaust their extended benefits, or until the week of Dec. 7, whichever comes first. That cut will reduce the bill’s cost by $5.8 billion over the next decade.
The new version of the bill would also freeze a 21% cut to Medicare physician reimbursement rates only through November, instead of through 2011. This will reduce the bill’s size by $16.4 billion over 10 years. The legislation, which has been stuck in the Senate for more than a week, originally came in at about $140 billion and would have added about $78.7 billion to the deficit. The revised bill would raise the deficit by $55.1 billion.
Lawmakers are hoping to vote on the bill as early as Thursday. But if Democratic leaders can’t rustle up enough support, the vote could be pushed back to next week.
The grab-bag legislation still contain provisions to renew expired tax provisions, lengthens a small business lending program and adds to infrastructure investments. It also increases the tax on money paid to managers of hedge funds and investment partnerships to ordinary income levels instead of the much-lower capital gains rate. Under the revised bill introduced Wednesday, investment fund managers would have to treat 75% of this money as ordinary income, beginning in 2011.
Senate lawmakers also voted Wednesday to include a measure in the bill that would push back the deadline to close on home purchases and still qualify for a federal home buyer tax credit of up to $8,000. Homebuyers would have until September 30, instead of June 30, to complete the transaction.
I will continue to monitor this bill as it progresses through Congress for any further updates and encourage you to subscribe (free) via Email or RSS to get the latest news along with all the other stimulus payments in 2010 and 2011. You can read the full bill and get more details here.
The Committee on Ways and Means, the chief tax-writing committee in the House of Representatives, has introduced a new bill called the H.R. 4213 American Jobs and Closing Tax Loopholes Act. The “American Jobs and Closing Tax Loopholes Act” makes significant investments in American jobs and cuts taxes to help the nation continue along the path of economic recovery and job growth. The economy has added 573,000 jobs since December-this bill includes the following key provisions to continue that growth:
Promote American job creation
The bill would extend the American Recovery and Reinvestment Act small business lending program that eliminates the fees normally charged for loans through the SBA from 75% to 90%. Since its creation, the program has supported over $26 billion in small business lending, which has helped to create or retain over 650,000 jobs. This provision is estimated to cost $505 million over 10 years.
The bill would support over 300,000 jobs for youth ages 16 to 24 through summer employment programs. This age group has some of the highest unemployment levels – 25% unemployment for those aged 16 to 19.
Provide relief for working families – The bill is estimated to provide American families with an additional $5 billion of tax cuts in 2010.
Deduction of State and local general sales taxes. The bill would extend for one year (through 2010) the election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes. This proposal is estimated to cost $1.8 billion over 10 years, and benefit over 12 million families.
Additional standard deduction for real property taxes. The bill would extend for one year (through 2010) the additional standard deduction ($500 for individual filers and $1,000 for couples) for State and local real property taxes. This proposal is estimated to cost $1.551 billion over 10 years and benefit 30 million homeowners (some who also took advantage of the home buyer tax credit)
Above-the-line deduction for qualified tuition and related expenses. The bill would extend for one year (through 2010) the above-the-line tax deduction for qualified education expenses. This proposal is estimated to cost $1.501 billion over 10 years and will provide tax relief for 4.4 million families. It would also extend the teacher’s out-of-pocket expenses deduction via extending the $250 above-the-line tax deduction for teachers and other school professionals for expenses paid or incurred for books, supplies (other than non-athletic supplies for courses of instruction in health or physical education), computer equipment (including related software and service), other equipment, and supplementary materials used by the educator in the classroom.
The Emergency Unemployment Compensation (EUC) program is scheduled to phase-out at the end of May 2010. This program provides (depending on a State’s unemployment rate) up to fifty-three (53) weeks of extended benefits. The bill would extend the EUC program through December 2010. Further, the 100% Federal funding for the Extended Benefits (EB) program is scheduled to phase-out at the end of May 2010. This program provides up to an additional 13 to 20 weeks of benefits in certain States (i.e., 13 weeks for States at or above 6.5% unemployment and another 7 weeks for States at or above 8% unemployment). The bill would extend full funding for the EB program through December 2010
Close tax loopholes
The bill would prevent investment fund managers from paying taxes at capital gains rates on investment management services income received as carried interest in an investment fund. To the extent that carried interest reflects a return on invested capital, the bill would continue to tax carried interest at capital gain tax rates. However, to the extent that carried interest does not reflect a return on invested capital, the bill would require investment fund managers to treat seventy-five percent (75%) of the remaining carried interest as ordinary income (50% for taxable years beginning before January 1, 2013).
IRA Charitable Contributions. The bill would restore the ability of people older than 70 1/2 to distribute up to $100,000 from their IRAs to charitable organizations without the money being recognized as income or being subject to itemization rules that have size limits on tax-favored contributions. CCH says the measure does not apply to SEP or SIMPLE IRAs or, in certain circumstances, to inherited IRAs.
Maintain access to affordable health care
Medicare physician payment rates (scaled back). Medicare physician payment rates are scheduled to be reduced by more than twenty percent (20%) in June. This provision would provide a 1.3 percent update to physician payment rates for the rest of this year and a 1 percent update for next year. For 2012 and 2013, annual updates would be determined based on a new payment system. Rates would continue to increase if spending growth on physician services is within reasonable limits, with an extra allowance for primary and preventive care.
Extension of premium assistance for COBRA benefits. The ARRA created a program to provide a 65% COBRA health insurance premium subsidy for up to 15 months for workers who have been involuntarily terminated. Under current law, eligibility for the COBRA premium assistance program will expire for individuals terminated after May 31, 2010. The bill would extend eligibility for the program for individuals terminated on or before December 31, 2010. This provision is estimated to cost $7.799 billion over 10 years.
The bill extends a tax credit for the manufacture of energy efficient homes and clarifies important standards with respect to the installation of energy efficient windows. The bill would also ensure that tax-incentives for manufacturers of energy-efficient appliances continue to work during this economic recession, by allowing manufacturer to exchange their tax credits for a direct payment equal to eighty-five percent (85%) of the tax credit that would otherwise have been allowed.
Hybrid Vehicles. An alternative motor vehicle credit will continue to be available for hybrid vehicles that use gasoline and electricity. Separate credits are available for autos and light trucks, and for medium and heavy trucks.
The Obama Administration strongly supports House passage of the House Amendment to the Senate Amendment to H.R. 4213. Passage of this legislation will provide much-needed relief to families, including extended access to health care benefits for workers who have lost their jobs and extended unemployment insurance benefits for millions of Americans who are looking for work. It will also provide critical assistance to hard-pressed States while encouraging continued job creation by America’s businesses.
[Update] A Possible September 2010 Extension to Home Buyer Credit June 30 2010 Tax Credit Deadline has also been included in this bill. The U.S. Senate has approved this provision aspart of the American Jobs and Closing Tax Loopholes Act (Bill: HR 4213) to extend the closing date for claiming the credit to September 30th. The U.S. House still has to approve the plan (very likely). See more in this article.