H.R.4213: American Workers, State, and Business Relief Act of 2010

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To amend the Internal Revenue Code of 1986 to extend certain expiring provisions, and for other purposes.
Sponsor: Charles B. RangelCommittees: House Committee on Ways and Means, Senate Committee on Finance


Article summary (how summaries work)
This bill would extend the filing deadline for existing tiers of unemployment benefits until Dec. 31, 2010. COBRA health care subsidies for the unemployed would also be extended. Other provisions in the bill include an extension of the current rate of Medicare payments to doctors and dozens of targeted tax cuts. The total cost of the bill is estimated at $140 billion, with $80 billion of that being for the extended unemployment benefits. None of the cost is offset with new revenues.


Contents

Bill provisions

Active financing exception

Active financing was extended through the 2009 tax year by the Emergency Economic Stabilization Act of 2008.[1] In May 2008, AIG asked Rep. Charlie Rangel (D-N.Y.) for an extension of the provision, which Rangel initially opposed. Rangel had been actively raising millions from AIG over the previous year for the City College of New York, which was naming a building after the congressman. After two May 2008 meetings with Democratic members of the House Ways and Means Committee who supported the extension, including Rep. Joseph Crowley (D-N.Y.), Rangel changed his mind and included the provision in the Renewable Energy and Job Creation Act of 2008 (which did not pass) and then the Emergency Economic Stabilization Act of 2008, which did pass.[2]

Bill history

Senate

After the second House passage (see below), the Senate again took up the bill:

June 24, 2010 vote:

On June 24, the Senate Democratic leadership again failed to muster the 60 votes necessary to force cloture and end debate on the bill.[3] This version had again been pared back by Sen. Max Baucus (D-Mont.) to take about $22 billion off the deficit impact, bringing it down to about $33 billion. Changes to the bill included:

  • Slight softening of the carried-interest tax loophole closer: This revision makes a few “technical corrections” to the provision in the bill to raise taxes on hedge fund managers who for years have been exploiting a loophole in the tax code to pay the lower capital gains rate on their personal income instead of the regular income tax rate. The revisions would cause this provision to bring in about $500 million less in new revenues over the next ten years.
  • Phase-out of state Medicaid aid: Like the previous version of the bill, this latest revision would extend for six months a stimulus program providing federal assistance for states that are struggling to pay their Medicaid bills. This version, however, would gradually phase out how much the federal government pays out over those six months, reducing the cost of the provision by $8 billion.
  • Elimination of Advanced EITC: People eligible for the earned income credit currently have the option to use a program allowing them to essentially get advances on the credit by having less money withheld from their paychecks throughout the year. The latest revision would end this program, saving $1.2 billion over the next ten years. The savings are the result of eliminating the possibility of errors in how the program is executed.
  • $11.29 billion in reallocations: Lots of money moved from other programs to pay for the spending items in H.R. 4213. Here’s what the summary from the Finance Committee says is being reallocated: “These reallocations consist of $600 million in unobligated Recovery Act funds intended for improving broadband deployment across the U.S. and $260 million in Recovery Act savings from the lower cost of construction and repair on Defense Department contracts. Also included is $900 million from non-Recovery Act Defense Department unobligated balances which will expire on September 30, 2010, and are excess to current requirements. In addition, effective June 1, 2014, food stamp benefits will return to the levels that individuals would have received in 2014 under pre-Recovery Act law.”
  • New Medicaid pricing for certain drugs: Would make “inhalation, infusion, or injectable drugs that are not dispensed through retail community pharmacies” subject to pricing under the Medicaid “average manufacturer price” formula. This would result in Medicaid paying about $2.1 billion less for these drugs over the next ten years.[4]


June 17, 2010 vote:

On June 17, the Senate Democratic leadership failed to muster the 60 votes necessary to force cloture and end debate on the bill.[5] This version of the bill had been pared back by Sen. Max Baucus (D-Mont.) to take $20 billion off the deficit impact. According to the Congressional Budget Office this revision of the bill would spend $105 billion, with a $55 billion impact after the revenue increases in the bill. The changes by Baucus included:

  • Shortening the Medicare payment cut patch, or “doc fix,” from 19 months to 6 months: Doctors are currently facing a 22% cut in their Medicare payments under an automatic pay formula that Congress created in 1997. The formula has recommended pay cuts for the past 7 years, but each year Congress has overridden it by passing temporary temporary patches. By shortening the length of the current patch by 13 months, the bill, technically, costs $16.4 billion less. But these savings are pretty cheap because Congress will almost certainly be back in 6 months when this patch expires to extend it again.
  • Eliminating the Federal Additional Compensation program: This is a stimulus program that provides an extra $25 per week for people receiving extended unemployment benefits. Eliminating it saves $5.8 billion over the next ten years.
  • Changes in the carried interest tax loophole closer: One of the big revenue raisers in the bill is a provisions to partially close a loophole in the tax code that lets hedge-fund and private-equity managers pay the lower capital gains rate (15%) on the cut they take from the appreciation of their clients’ portfolios rather than the regular income tax rate (up to 39%). In the Democrats’ last revision of H.R. 4213, they softened this provision to satisfy the influential hedge fund industry. In this revision, they are tightening it back up a bit by increasing how much of their income hedge fund managers old have to pay at the regular rate. This change would bring in an extra $13.9 billion over the next ten years.[6]


June 16, 2010 vote:

On June 16, the Senate Democratic leadership failed in its first vote to muster the 60 votes necessary to force cloture and end debate on the bill, which would allow an up-or-down, majority-rules vote on it.[7]


Second House passage

The House passed HR 4213 for the second time on May 28, 2010. It split the vote into two parts. The second vote dealt with Medicare reimbursement rates (see below for details):[8]


The first vote was the rest of the bill, except the Medicare reimbursement rates (see below for details):


As passed, the bill would:

Stimulus Spending

Small business credit (Costs $505 million/10 years): Extends American Recovery and Reinvestment Act program to encourage lending to small business by:


Local infrastructure stimulus funding (Costs $7.9 billion):

  • Expand and extend Build America Bonds from 2010 to 2012. Used by state and local governments to fund infrastructure spending. (Costs $4.042 billion/10 years).[10]
  • Expand and extend Recovery Zone Bonds to 2011. Used by state and local governments to fund infrastructure spending. (Costs $2.385 billion/10 years).[10]
  • Expand state authority to issue bonds funding infrastructure spending by private entities that provides water and sewer facilities. (Costs $372 million/10 years)[10]
  • Ease AMT costs for state and local government bond-issuing activity. (Costs $224 million/10 years) [10]
  • State housing agency funding. (Costs $11 million/10 years)[10]
  • Extension of tax exemptions for municipal bonds funding non-housing infrastructure made through Federal Home Loan Banks to 2011. (Costs $148 million/10 years)[10]
  • Extension of tax breaks for financial institutions purchasing municipal bonds through 2011. (Costs $254 million/10 years)[10]
  • One-year extension of tax breaks for costs of cleaning up hazardous "brownfield" environmental sites through 2010. (Costs $158 million /10 years)[10]
  • One-year extension of tax breaks on sales or exchange of brownfield sites through 2010. (Costs $54 million/10 years)[10]
  • Restores "Surface Transportation Funding Equity", which makes transportation funding available to 21 states which currently receive no funding under National Corridors and Projects of National and Regional Significance Programs. Also expands funding under those programs beyond those included in the Hiring Incentives to Restore Employment Act.[9]


Tax breaks for businesses and consumers (Costs $20 billion):

  • Extends the research and development tax credit for one year through 2010. (Costs $6.650 billion/10 years)[10]
  • Refundable tax credits for corporations making domestic investments in capital equipment in 2010 (Costs $2.337 billion/10 years)[10]
  • Extend for one year (through 2010) tax breaks for landlords improving leasehold properties like restaurants and retail. (Costs $4.851 billion/10 years)[10]
  • Extend for one year (through 2010) the active financing exception from Subpart F of the tax code (Costs $3.923 billion/10 years)[10]
  • Extend for one year (through 2010) current look-through treatment of payments between controlled foreign subsidiaries of U.S. corporations (Costs $574 million/10 years)[10]
  • Extend for one year (through 2010) a tax credit for small business owners for a portion of wages paid to activated military reservists. (Costs $54 million/10 years)[10]
  • Extend for one year (through 2010) a five-year depreciation recovery period for farm business machinery and equipment. (Costs $0) [10]

Tax breaks for businesses in economically-depressed areas.

  • New Markets Tax Credit. Allows investors in businesses in low-income communities to claim the New Markets Tax Credit against the Alternative Minimum Tax. For investments made between 3/15/2010 and 1/1/2012. (Costs $1.792 billion/10 years) [10]
  • Extends for one year (through 2010) the designation of economically depressed Empowerment Zones, which allow individuals and business to claim special tax incentives. (Costs $304 million/10 years)[10]
  • Extends for one year (through 2010) the designation of economically depressed Renewal Communities where individuals and businesses are eligible for special tax incentives. (Costs $621 million/10 years)
  • Extends for one year (through 2010) the designation of parts of Washington, DC as Renewal Communities and the $5,000 first-time homebuyer credit. (Costs $85 million/10 years)[10]


Tax Breaks for Tribal Businesses

  • Extends for one year (through 2010) the business tax credit for employers of Indians. (Costs $49 million/10 years)[10]
  • Extends for one year (through 2010) an accelerated depreciation schedule for some Indian reservation property. (Costs $123 million/10 years)[10]


Tax Breaks for Businesses in Territories and Possessions

  • Puerto Rico: Extends for one year (through 2010) a tax deduction for domestic production in Puerto Rico (Costs $185 million/10 years)[10]
  • American Samoa: Payment to the American Samoan government equal to the cost of an economic development tax credit. (Costs $18 million/10 years)[10]


Pension provisions

  • Several rule-suspensions temporarily relieving single-employer and multi-employer pension plans from funding requirements.(Raises $1.987 billion/10 years)[10]
  • New disclosure rules for defined contribution plan administrators.(Revenue neutral)[10]


Summer jobs

Trade provisions

  • Trade Adjustment Assistance for Communities – Community College and Career Training Grant Program. Allows a grant program for educational institutions training workers eligible for Trade Adjustment Assistance to be expanded to the generally unemployed and excludes for-profit educational institutions. (Revenue neutral)[10]
  • Wool Trust Fund. Allows funds collected in tariffs on other fabrics to be used to fund payments to U.S. suit makers.(Revenue neutral)[10]
  • Cotton Trust Fund. Reinstates funding for payments to U.S. cotton shirt makers. House Democrats say it would keep 800 textile workers employed. (Costs $53 million/3 years.)[10]


Support for unemployed and working individuals

Individual tax cuts

  • Extends for one year (through 2010) the option to take an itemized deduction for state and local sales taxes instead of state and local income taxes. (Costs $1.800 billion/10 years)[10]
  • Extends for one year (through 2010) the additional deduction for state and local property taxes. (Costs $1.551 billion/10 years)[10]
  • Extends for one year (through 2010) the above-the-line deduction for some tuition and education expenses.(Costs $693 million/10 years)[10]
  • Extends for one year (through 2010) the above-the-line deduction for teachers and other education professionals for books and other school supplies.(Costs $215 million/10 years)[10]


Unemployment insurance

Unemployment benefits extensions: (Costs $39.8 billion/10 years)

  • Extension of Emergency Unemployment Compensation (EUC) program through November 2010 (scheduled phase-out at end of May 2010). The EUC provides up to 53 weeks of unemployment benefits, depending on the unemployment rate in each state.[10]
  • Extension of Extended Benefits (EB) program through November 2010 (scheduled phase-out at end of May 2010). The program provides funding to states with over 6.5% unemployment rate for 13 additional weeks of unemployment benefits and 20 weeks for states above 8% unemployment.
  • Extension of the Federal Additional Compensation (FAC) through November 2010 (scheduled to phase out at the end of May 2010), which provides an additional $25 per week in unemployment benefits.
  • Elimination of ineligibility for EUC program with part-time employment. Coordinates EUC benefits with state benefits so claimants remain eligible if switching from the EUC to state benefits would reduce their weekly check by at least $100 or 25%.[10]


TANF jobs and emergency fund

  • Extends for one year (through September 2011) the scheduled expiration of an Emergency Contingency Fund within the Temporary Assistance to Needy Families (TANF) program for states with increasing expenditures on one-time and short-term aid for needy families and subsidized employment programs that are scheduled to employ 185,000 jobs by expiration.(Costs $2.48 billion/10 years)[10]

Veterans disability pay

  • Allows disabled veterans to take both military retirement pay without deducting VA disability pay from it. No other federal employee is required to deduct VA disability payments from their retirement benefit amount. (Costs $686 million/10 years)[10]

National Housing Trust Fund

  • Provides $1 billion in a one-time capital infusion into the National Housing Trust Fund to support grants funding the building and rehabilitation of low-income affordable housing. Also $65 million in vouchers. House Democrats say it will support production of 10,000 rental homes, 15,000 new construction jobs and 4,000 other new jobs and will address a low-income housing shortage.(Costs $1.065 billion/10 years)[10]
  • Extension for one year (through 2010) of hold-harmless provisions preventing negative inflation rates (CPI) from lowering the official poverty line and thus decreasing eligibility for programs like Medicare and food stamps. (Costs $317 million/10 years)[10]
  • Consolidate exclusion of federal income tax refunds from income determinations of federal assistance programs. (Costs $2 million/10 years)[10]

Disaster response

  • Oil spill response: The Oil Spill Liability Trust Fund pays damages to individuals, businesses and communities that are in excess of existing caps on liabilities by those that cause spills. The bill increases the tax that funds the Trust Fund from 8 cents per barrel to 34 cents per barrel and raises the cap on payouts for a single spill from $1 billion to $5 billion (including up to $2.5 billion in natural resource damage assessments.) (Raises $10.785 billion/10 years) [10]
  • National flood insurance: Extends the expiration of authority for the National Flood Insurance Program to write and renew flood insurance from May 31, 2010 to Dec. 31, 2010. (Revenue neutral.) [10]
  • Mine safety: Extends for one year (through 2010) the tax credit for training mine rescue team members (Costs $7 million/10 years) and the 50% bonus depreciation for businesses for certain mine safety equipment. (Revenue neutral.)[10]
  • Tax breaks for federal disasters: Extends for one year (through 2010) deductions for individuals and businesses with expenses as a result of federally declared disasters. (Costs $879 million/10 years)[10]

Articles and resources

See also

References

  1. Congressional Research Service summary of the Emergency Economic Stabilization Act of 2008, available on GovTrack.us.
  2. DAVID KOCIENIEWSKI, "Rangel Pushed for a Donation; Insurer Pushed for a Tax Cut," New York Times, Jan. 3, 2009.
  3. Donny Shaw, "GOP Blocks Unemployment Insurance Bill Once Again, Dems Giving Up," June 24, 2010.
  4. Donny Shaw, "Dems Shrink The Unemployment/Tax Extenders Bill Again, But GOP Still Says No," OpenCongress blog, June 24, 2010.
  5. Donny Shaw, "Dems Fail Again to Get 60 on the Unemployment Bill," OpenCongress blog, June 18, 2010.
  6. Donny Shaw, "The Shrinking Unemployment Bill," OpenCongress blog, June 17, 2010.
  7. Donny Shaw, "Dems Lose Big on Unemployment Insurance/Tax Extenders Vote," OpenCongress blog, June 16, 2010.
  8. Donny Shaw, "House Passes Scaled-Back Jobs Bill," OpenCongress blog, May 28, 2010.
  9. 9.0 9.1 Speaker Nancy Pelosi, "The American Jobs and Closing Tax Loopholes Act of 2010," undated, but published after House passage on May 28, 2010.
  10. 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.38 10.39 10.40 10.41 10.42 10.43 10.44 Democratic staff, House Ways and Means Committee, "The American Jobs and Closing Tax Loopholes Act of 2010,", May 28, 2010.

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