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General News    H3'ed 2/14/09

Summary of the Stimulus bill - Don't look half bad to me

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Business $3,540,000,000
Industrial Development Bonds (IDB). Under current law, certain manufacturing facilities are eligible for tax exempt bond financing. The definition of a manufacturing facility is limited for the purposes of such financing to facilities that are used in the manufacturing or production of tangible personal property. The proposal amends the definition of manufacturing facility to any facility used in the manufacturing, creation or production of tangible or intangible property. Intangible property is any patent, copyright, formula, process, design, pattern, knowhow, format or other similar item. The proposal also clarifies which physical components of a manufacturing facility qualify as ancillary and therefore are subjected to a 25% limitation in the amount of bond issuance used to build or re-construct those components. $203,000,000
Expands assistance programs for service sector workers affected by outsourcing to all countries, including China and India; increases training funds to states by 160% to $575 million per year; and reauthorized all trade assistance programs, which expired in 2007, through Dec. 31, 2010 $1,600,000,000
Prohibits Customs and Border Protection from demanding that lumber, steel and other companies repay duties that CBP collected on Canadian and Mexican imports and then gave to the companies between 2001 and 2005 $90,000,000
Advanced Energy Investment Credit. The proposal establishes a new 30% investment tax credit for facilities engaged in the manufacture of advanced energy property. Credits are available only for projects certified by the Treasury secretary, in consultation with the Energy secretary, through competitive bidding. The Treasury must establish a certification program no later than 180 days after date of enactment and may allocate up to $2.3 billion in credits. Advanced energy property includes technology for the production of renewable energy, energy storage, energy conservation, efficient transmission and distribution of electricity and carbon capture and sequestration. $1,647,000,000

Other Tax Relief $6,858,000,000
New Markets Tax Credit. Under current law, there are $3.5 billion of new markets tax credits (NMTC) available for each of 2008 and 2009. The provision increases the available credits for 2008 to $5 billion and the available credits for 2009 to $5 billion. $815,000,000
Recovery Zone Bonds. The bill would create a new category of tax credit bonds for investment in economic recovery zones. The bill would authorize $10 billion in recovery zone economic development bonds and $15 billion in recovery zone facility bonds. These bonds could be issued during 2009 and 2010. Each state would receive a share of the national allocation based on that state's job losses in 2008 as a percentage of national job losses in 2008 (each state will receive a minimum allocation of these bonds). These allocations would be sub-allocated to local municipalities. Municipalities receiving an allocation of these bonds would be permitted to use these bonds to invest in infrastructure, job training, education and economic development in areas within the boundaries of the state, city or county (as the case may be) that has significant poverty, unemployment or home foreclosures. $5,371,000,000
Treasury Department Low-Income Housing Grants in Lieu of Tax Credits. Under current law, taxpayers are allowed to claim a low-income housing tax credit for certain investments made in low-income housing. These tax credits help attract private capital to invest in the construction, acquisition or rehabilitation of qualified low-income housing buildings. Current economic conditions have severely undermined the effectiveness of these tax credits. As a result, the bill would allow taxpayers to receive a grant from the Treasury in lieu of tax credits. Under this provision, state housing agencies would receive a grant equal to up to 85% of 40% of the state's low-income housing tax credit allocation in lieu of the low-income housing tax credits they would have received. The sub-awards are subject to the same requirements (including rent, income and use restrictions on such buildings) as the low-income housing tax credit allocations. The grant program would apply to each state's 2009 low-income housing tax credit allocation. $69,000,000
Tribal Economic Development Bonds. Under current law, tribal governments are limited in their ability to issue tax-exempt bonds. Projects funded by bonds issued by tribal governments must satisfy an "essential governmental function" requirement. This requirement is not imposed on projects funded by bonds issued by state and local governments and can limit the ability of tribal governments to use tax-exempt bonds for economic development. The bill would temporarily allow tribal governments to issue $2 billion in tax-exempt bonds for projects without this restriction in order to spur economic development on tribal lands. It would also require the Treasury secretary study whether this restriction should be repealed on a permanent basis. $315,000,000
Modify Speed Requirement for High-Speed Rail Exempt Facility Bonds. Under current law, states are allowed to issue private activity bonds for high-speed rail facilities. Under current law, a high-speed rail facility is a facility for the transportation of passengers between metropolitan areas using vehicles that are reasonably expected to operate at speeds in excess of 150 miles per hour between scheduled stops. The bill would allow these bonds to be used to develop rail facilities that are used by such trains. $288,000,000

Infrastructure Financing Tools $19,350,000,000
De Minimis Safe Harbor Exception for Tax-Exempt Interest Expense for Financial Institutions. Under current law, financial institutions are not allowed to take a deduction for the portion of their interest expense that is allocable to such institution's investments in tax-exempt municipal bonds. In determining the portion of interest expense that is allocable to investments in tax-exempt municipal bonds, the bill would exclude investments in tax-exempt municipal bonds issued during 2009 and 2010 to the extent that these investments constitute less than 2% of the average adjusted bases of all the assets of the financial institution. (*The cost is included in the next provision, Modification of Small Issuer Exception....) $0
Modification of Small Issuer Exception to Tax-Exempt Interest Expense Allocation Rules for Financial Institutions. As described above, financial institutions are not allowed to take a deduction for the portion of their interest expense that is allocable to such institution's investments in tax-exempt municipal bonds. For purposes of this rule, bonds that are issued by a "qualified small issuers" are not taken into account as investments in tax-exempt municipal bonds. Under current law, a "qualified small issuer" is defined as any issuer that reasonably anticipates that the amount of its tax-exempt obligations (other than certain private activity bonds) will not exceed $10,000,000. The bill would increase this dollar threshold to $30,000,000 when determining whether a tax-exempt obligation issued in 2009 and 2010 qualifies for this small issuer exception. The small issuer exception would also apply to an issue if all of the ultimate borrowers in such issue would separately qualify for the exception. For these purposes, the issuer of a qualified 501(c)(3) bond shall be deemed to be the ultimate borrower on whose behalf a bond was issued. $3,234,000,000
Eliminate Costs Imposed on State and Local Governments by the Alternative Minimum Tax. The alternative minimum tax (AMT) can increase the costs of issuing tax-exempt private activity bonds imposed on state and local governments. Under current law, interest on tax-exempt private activity bonds is generally subject to the AMT. This limits the marketability of these bonds and, therefore, forces state and local governments to issue these bonds at higher interest rates. Last year, Congress excluded one category of private activity bonds (i.e., tax-exempt housing bonds) from the AMT. The bill would exclude the remaining categories of private activity bonds from the AMT if the bond is issued in 2009 or 2010. The bill also allows AMT relief for current refunding of private activity bonds issued after 2003 and refunded during 2009 and 2010. $555,000,000
Delay Application of Withholding Requirement on Certain Governmental Payments for Goods and Services. For payments made after Dec. 31, 2010, the code requires withholding at a 3% rate on certain payments to persons providing property or services made by federal, state and local governments. The withholding is required regardless of whether the government entity making the payment is the recipient of the property or services (those with less than $100 million in annual expenditures for property or services are exempt). Numerous government entities and small businesses have raised concerns about the application of this provision. The provision would delay for one year (through Dec. 31, 2011) the application of the withholding requirement on government payments for goods and services in order to provide time for the Treasury to study the impact of this provision on government entities and other taxpayers. $291,000,000
Qualified School Construction Bonds. The bill creates a new category of tax credit bonds for the construction, rehabilitation or repair of public school facilities or for the acquisition of land on which a public school facility will be constructed. There is a national limitation on the amount of qualified school construction bonds that may be issued by state and local governments of $22 billion ($11 billion allocated initially in 2009 and the remainder allocated in 2010). There is a national limitation on the amount of qualified school construction bonds that may be issued by Indian tribal governments of $400 million ($200 million allocated initially in 2009 and the remainder allocated in 2010). $9,877,000,000
Extension and Increase in Authorization for Qualified Zone Academy Bonds (QZABs). The bill would allow an additional $1.4 billion of QZAB issuing authority to state and local governments in 2009 and 2010, which can be used to finance renovations, equipment purchases, developing course material and training teachers and personnel at a qualified zone academy. In general, a qualified zone academy is any public school (or academic program within a public school) below college level that is located in an empowerment zone or enterprise community and is designed to cooperate with businesses to enhance the academic curriculum and increase graduation and employment rates. QZABs are a form of tax credit bonds which offer the holder a federal tax credit instead of interest. $1,045,000,000
Tax Credit Bond Option for State and Local Governments ("Build America Bonds"). The federal government provides significant financial support to state and local governments through the federal tax exemption for interest on municipal bonds. Both tax credit bonds and tax-exempt bonds provide a subsidy to municipalities by reducing the cash interest payments that a state or local government must make on its debt. Tax credit bonds differ from tax-exempt bonds in two principal ways: interest paid on tax credit bonds is taxable and a portion of the interest paid on tax credit bonds takes the form of a federal tax credit. The federal tax credit offsets a portion of the cash interest payment that the state or local government would otherwise need to make on the borrowing. For 2009 and 2010, the bill would provide state and local governments with the option of issuing a tax credit bond instead of a tax-exempt governmental obligation bond. Because the market for tax credits is currently small given current economic conditions, the bill would allow the state or local government to elect to receive a direct payment from the federal government equal to the subsidy that would have otherwise been delivered through the federal tax credit for bonds. $4,348,000,000

Renewable Energy Tax Credits $19,968,000,000
Long-term Extension and Modification of Renewable Energy Production Tax Credit. The bill would extend the placed-in-service date for wind facilities for three years (through Dec. 31, 2012). The bill would also extend the placed-in-service date for three years (through Dec. 31, 2013) for certain other qualifying facilities: closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy and marine renewable facilities. $13,143,000,000
Temporary Election to Claim the Investment Tax Credit in Lieu of the Production Tax Credit. Under current law, facilities that produce electricity from solar facilities are eligible to take a 30% investment tax credit in the year that the facility is placed in service. Facilities that produce electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy and marine renewable facilities are eligible for a production tax credit. The production tax credit is payable over a 10-year period. Because of current market conditions, it is difficult for many renewable projects to find financing due to the uncertain future tax positions of potential investors in these projects. The bill would allow facilities to elect to claim the investment tax credit in lieu of the production tax credit. $285,000,000
Repeal Subsidized Energy Financing Limitation on the Investment Tax Credit. Under current law, the investment tax credit must be reduced if the property qualifying for the investment tax credit is also financed with industrial development bonds or through any other federal, state, or local subsidized financing program. The bill would repeal this subsidized energy financing limitation on the investment tax credit in order to allow businesses and individuals to qualify for the full amount of the investment tax credit even if such property is financed with industrial development bonds or through any other subsidized energy financing. (*Cost of this is included in the next provision, Removal of Dollar Limitations on Certain Energy Credits) $0
Removal of Dollar Limitations on Certain Energy Credits. Under current law, businesses are allowed to claim a 30% tax credit for qualified small wind energy property (capped at $4,000). Individuals are allowed to claim a 30% tax credit for qualified solar water heating property (capped at $2,000), qualified small wind energy property (capped at $500 per kilowatt of capacity, up to $4,000), and qualified geothermal heat pumps (capped at $2,000). The bill would repeal the individual dollar caps. As a result, each of these properties would be eligible for an uncapped 30% credit. $872,000,000
Clean Renewable Energy Bonds. The bill authorizes an additional $1.6 billion of new clean renewable energy bonds to finance facilities that generate electricity from the following resources: wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewable and trash combustion facilities. This $1.6 billion authorization will be subdivided into thirds: 1/3 will be available for qualifying projects of state/local/tribal governments; 1/3 for qualifying projects of public power providers; and 1/3 for qualifying projects of electric cooperatives. $578,000,000
Qualified Energy Conservation Bonds. The bill authorizes an addition $2.4 billion of qualified energy conservation bonds to finance state, municipal and tribal government programs and initiatives designed to reduce greenhouse gas emissions. The bill would also clarify that qualified energy conservation bonds may be issued to make loans and grants for capital expenditures to implement green community programs. The bill also clarifies that qualified energy conservation bonds may be used for programs in which utilities provide ratepayers with energy-efficient property and recoup the costs of that property over an extended period of time. $803,000,000
Tax Credits for Energy-Efficient Improvements to Existing Homes. The bill would extend the tax credits for improvements to energy-efficient existing homes through 2010. Under current law, individuals are allowed a tax credit equal to 10% of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during the year. This tax credit is capped at $50 for any advanced main air circulating fan, $150 for any qualified natural gas, propane, oil furnace or hot water boiler and $300 for any item of energy-efficient building property. For 2009 and 2010, the bill would increase the amount of the tax credit to 30% of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements during the year. The bill would also eliminate the property-by-property dollar caps on this tax credit and provide an aggregate $1,500 cap on all property qualifying for the credit. The bill would update the energy-efficiency standards of the property qualifying for the credit. $2,034,000,000
Tax Credits for Alternative Refueling Property. The alternative refueling property credit provides a tax credit to gas stations that install alternative fuel pumps, such as fuel pumps that dispense E85 fuel, electricity, hydrogen and natural gas. For 2009 and 2010, the bill would increase the 30% alternative refueling property credit for businesses (capped at $30,000) to 50% (capped at $50,000). Hydrogen refueling pumps would remain at a 30% credit percentage; however, the cap for hydrogen refueling pumps will be increased to $200,000. In addition, the bill would increase the 30% alternative refueling property credit for individuals (capped at $1,000) to 50% (capped at $2,000). $54,000,000
Plug-in Electric Drive Vehicle Credit. The bill modifies and increases a tax credit passed into law at the end of last Congress for plug-in electric drive vehicles placed in service during the year. The base amount of the credit is $2,500. If the qualified vehicle draws propulsion from a battery with at least 5 kilowatt hours of capacity, the credit is increased by $417, plus another $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours up to 16 kilowatt hours. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter in which the manufacturer records its 200,000th sale of a plug-in electric drive vehicle. The credit is reduced in following calendar quarters. The credit is allowed against the alternative minimum tax (AMT). The bill also restores and updates the electric vehicle credit for plug-in electric vehicles that would not otherwise qualify for the larger plug-in electric drive vehicle credit and provides a tax credit for plug-in electric drive conversion kits. $2,002,000,000
Addition of Permanent Sequestration Requirement to CO2 Capture Tax Credit. Last year, Congress provided a $10 credit per ton for the first 75 million metric tons of carbon dioxide captured and transported from an industrial source for use in enhanced oil recovery and $20 credit per ton for carbon dioxide captured and transported from an industrial source for permanent storage in a geologic formation. Facilities were required to capture at least 500,000 metric tons of carbon dioxide per year to qualify. The bill would require that any taxpayer claiming the $10 credit per ton for carbon dioxide captured and transported for use in enhanced oil recovery must also ensure that such carbon dioxide is permanently stored in a geologic formation. $0
Parity for Transit Benefits. Current law provides a tax-free fringe benefit employers can provide to employees for transit and parking. Those benefits are set at different dollar amounts. This provision would equalize the tax-free benefit employers can provide for transit and parking. The proposal sets both the parking and transit benefits at $230 a month for 2009, indexes them equally for 2010 and clarifies that certain transit benefits apply to federal employees. $192,000,000
Treasury Department Energy Grants in Lieu of Tax Credits. Under current law, taxpayers are allowed to claim a production tax credit for electricity produced by certain renewable energy facilities and an investment tax credit for certain renewable energy property. These tax credits help attract private capital to invest in renewable energy projects. Economic conditions have undermined the effectiveness of these tax credits. As a result, the bill would allow taxpayers to receive a grant from the Treasury Department in lieu of tax credits. This grant will operate like the current-law investment tax credit. The Treasury Department will issue a grant in an amount equal to 30% of the cost of the renewable energy facility within 60 days of the facility being placed in service or, if later, within 60 days of receiving an application for such grant. $5,000,000

Aid to State and Local Governments $95,136,000,000
One-time grants to encourage states to increase unemployment coverage; also for administrative costs $2,975,000,000
Temporarily waives interest payments on loans received by state unemployment trust funds through Dec. 31, 2010 $1,100,000,000
Extends unemployment for 13 weeks to railroad workers not included in the federal/state unemployment system and provide aid to states for the administration of this program $159,000,000
Creates a capped, temporary Temporary Assistance for Needy Families fund to help states during the recession $2,418,000,000
Provides additional aid to states with high population growth and increased poverty $319,000,000
Repeals cuts to child support enforcement $1,000,000,000
Medicaid increase for states $86,600,000,000
Increases state hospital payments by 2.5% $460,000,000
Extends a moratorium on Medicaid regulations for case management, provider taxes and school-based administration and transportation services through June 30, 2009 $105,000,000

Health Care $20,352,000,000
Eliminates cost-sharing for American Indians and Alaska natives in Medicaid, protects tribal property and maintains access to Indian health facilities $134,000,000
Temporarily applied Medicaid prompt payment requirements for nursing facilities and hospitals $680,000,000
Health information technology $19,200,000,000
Medicare payments for teaching hospitals $191,000,000
Medicare payments for hospices $134,000,000
Medicare payments to long-term care hospitals $13,000,000

Aid to People Affected by the Economic Downturn $62,310,000,000
Extension of Emergency Unemployment Compensation. Through Dec. 31, 2009, the bill continues the emergency unemployment compensation program, which provides up to 33 weeks of extended unemployment benefits to workers exhausting their regular benefits. $26,960,000,000
Increases weekly unemployment benefits by an additional $25 through 2009 $8,800,000,000
Extends transitional medical assistance from June 30, 2009 to Dec. 31, 2010 $1,300,000,000
Extends the qualified individual program, which assists low-income individuals with Medicare Part B premiums through Dec. 31, 2010 $550,000,000
Premium subsidies for COBRA continuation for unemployed workers $24,700,000,000

 

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