House Passes Tax-Extenders Package Before Holiday Recess

House Passes Tax-Extenders Package before Holiday Recess

May 28, 2010

FEI Summary

Today, the House of Representatives passed a 10-year, $116 billion "extender" bill that includes a one-year, retroactive renewal (through 2010) of the research tax credit and other individual and business tax incentives that expired at the end of last year.  H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, is partially offset by $56 billion in revenue-raising tax provisions, resulting in a net cost of $60 billion over 10 years.

FEI’s Committee on Private Company Policy (CPC-P) has been active in this debate, and you can view a recent letter sent to congressional leadership by this committee on the FEI Web site.

The revenue offsets in H.R. 4213 include international tax increases affecting U.S. and foreign multinationals, and a tax increase on carried interest.  Under a last-minute modification, the carried interest provision generally would apply beginning in 2011 (rather than date of enactment, as originally proposed).  Other revenue offsets in H.R. 4213 include pension funding relief, a change in the payroll tax treatment of certain S corporations that provide professional services, and an increase in the Oil Spill Liability Trust Fund excise tax from 8 cents to 34 cents per barrel.

In a floor statement, House Ways and Means Committee Ranking Member Dave Camp (R-Mich.) cited broad business opposition – including FEI’s – to the tax increases in the bill. In particular, Rep. Camp said: "The bill...includes more than a half-dozen complex changes to our international tax rules. These new changes collectively raises close to $15 billion, but have not been reviewed by the Ways and Means Committee. Given the desperate shape of our economy and the need to remain competitive with other countries, we should not be rushing forward with massive tax increases without knowing their exact impact."

H.R. 4213 would prevent a scheduled reduction in Medicare physician payment rates through 2011, and extend unemployment insurance benefits until Nov. 30. The bill does not address the scheduled expiration of COBRA premium assistance and a temporary increase in the federal Medicaid matching rate ("FMAP"). These federal spending programs are scheduled to expire next week.

The bill now goes to the Senate, which already has announced it will consider amendments to H.R. 4213 after next week's Memorial Day recess period. As a result, certain federal spending programs will not be renewed before their scheduled expiration next week. If any Senate amendments are adopted, the bill would have to go back to the House for further consideration.

Posted May 28, 2010 by Chris Graham (cgraham@financialexecutives.org) associate manager of Government Affairs, Financial Executives International (FEI), in conjunction with content supplied by PricewaterhouseCoopers. This summary does not represent FEI opinion unless specifically noted above.