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Omnibus Spending Bill Passed
The House and
Senate passed, and the President signed into law, the $1.1 trillion,
2,000 page omnibus spending bill on Friday, December 18, their last day
in session before leaving for a three-week recess. In the House, the
vote was 316 to 113 (150 Republicans and 166 Democrats voted yea). In
the Senate, the vote was 65 to 33 (27 Republicans, 37 Democrats, and
one independent voted for the bill). Links to the official summaries
for each of the 12 appropriations bill that make up the package can be
found below:
Agriculture Appropriations;$21.75
billion for FY 2016, $925 million more than FY 2015, and $34 million
below the President’s request.
Commerce, Justice, Science Appropriations;$55.7
billion for FY 2016, $5.6 billion more than FY 2015, and $3.7 billion
above the President’s request.
Defense Appropriations; $514.1 billion
in FY 2016 base discretionary funding, $23.9 billion more than FY 2015
– also included is $58.6 billion in GWOT/OCO funding.
Energy and Water Appropriations;
$37.2 billion for FY 2016, $3 billion more than FY 2015 and $1.1
billion above the President’s request.
Financial Services Appropriations;
$23.2 billion for FY 2016, $1.7 billion more than FY 2015.
Homeland Security Appropriations; $41
billion for FY 2016, $1.3 billion more than FY 2015 and $443 million
below the President’s request.
Interior and Environment Appropriations;
$32.159 billion in FY 2016, $1.7 billion more than FY 2015 and $1.1
billion below the President’s request.
Labor, Health and Human Services, and Education
Appropriations; $162.1 billion in FY 2016, $5.4 billion more
than FY 2015 and $5.5 billion below the President’s request.
Legislative Branch Appropriations
Military Construction / Veterans Affairs
Appropriations; $79.9 billion in FY 2016, $7.8 billion more
than FY 2015 and $1.1 billion above the President’s request. Military
construction projects receive $8.2 billion, an increase of $1.4 billion
over FY 2015 levels. VA programs receive $71.4 billion in discretionary
funding, $6.4 billion above 2015 levels (discretionary and mandatory
funding for VA programs total $162.7 billion).
State and Foreign Operations Appropriations;
$53 billion for FY 2016 ($15 billion of which is for OCO/GWOT), $3.4 billion
more than FY 2015 and $1.3 billion below the President’s request.
Transportation, Housing and Urban Development
Appropriations; $57.6 billion for FY 2016, $3.8 billion more
than FY 2015.
The package of
legislation included a number of policy riders. Most notably, the
omnibus spending bill will lift the ban on oil exports and delay
implementation of the ACA’s Cadillac tax for one year. The bill also
prohibits individuals who traveled to Iraq, Syria, or other countries
with significant levels of terrorist activity from participating in the
visa waiver program. Health benefits for 9/11 first responders are be
extended. Finally, a number of tax breaks and credits have been made
permanent through partnering legislation (described in detail below).
This includes a two year delay of the ACA’s Medical Device Tax. Solar
and wind tax incentive programs were extended in the package of
legislation as well (with a five year phase-out period).
Tax Extenders Update
A number of
business and individual tax breaks have either been extended
temporarily or permanently as part of the overall omnibus spending
package. Below is a list of many of the tax incentive programs that
have been extended either temporarily or permanently. A number of tax
compliant reforms, IRS operational changes, administrative changes to
the U.S. Tax Court, and changes to a slew of tax regulations are
included in the legislation as well. The bill did not include any
offsets to pay for the bill’s estimated 10 year $622 billion price tag.
This legislation passed the House as a separate bill (from the omnibus)
and was bundled together with the spending bill by the Senate.
Permanent
extensions for businesses include:
·
The research and
development tax credit
·
Section 179 expense
limits and phase-out thresholds regarding depreciable business assets
·
The abilities of global
finance/banking companies to deter tax on income from their foreign
subsidiaries
·
A 5 year recognition
period (as opposed to 10 years), applicable to entities that switch
from S to C corporation status, whereby the entity has to hold its
assets so to avoid taxation on built-in gains.
·
The ability of
taxpayers to avoid taxation on the sale of certain small-business
stocks
·
Tax exemptions for RIC
dividends
·
A tax credit for
businesses for differential pay to employees deployed in the military
(the measure also extends this credit to companies that employ more
than 50 individuals).
·
Deductions for food
donations to non-profits
·
A rule that protects
payments by a company to a non-profit/tax-exempt entity from being
considered unrelated business income
·
A FIRPTA provision that
includes RICs in the definition of a “qualified investment entity”
Permanent
extensions for individuals include:
·
The American
Opportunity Tax Credit
·
The Child Tax Credit
·
The Earned Income Tax
Credit
·
The ability of
individuals to deduct state and local sales taxes as opposed to income
tax (primarily benefiting individuals who live in states without income
tax)
·
The ability of teachers
to deduct out-of-pocket classroom expenses
·
The employer transit
and parking tax benefit (commonly referred to as the mass transit
commuter tax benefit)
·
The IRA Charitable
Rollover provision
Below are tax
incentives that were extended temporarily for individuals:
·
The ability of
individuals with mortgages to not count forgiven debt towards taxable
income is extended for two years. Also, the ability to deduct mortgage
insurance premiums is extended for two years and widened to apply to
mortgages on personal residences.
·
Tuition deductions (and
other higher education expense deductions) are extended for two years.
Tax-advantaged college savings plans are expanded.
·
The 10% energy
efficiency improvement credit is extended for two years.
Below are tax
incentives that were extended temporarily for businesses:
·
Work Opportunity Tax Credit
is extended for five years
·
The New Market Tax
Credit is extended for five years
·
Empowerment zone tax
incentives are extended for two years
·
The Production Tax
credit (for non-wind renewable energy) is extended for two years
·
The biodiesel,
alternative fuel, and alternative fuel mixture tax credits were
extended for two years
·
The energy efficient
home tax credit for new constructions is extended for two years
·
Tax credits for
improvements to energy efficiency is extended for two years
·
An alternative fuel
pump installation tax credit (i.e. for natural gas or ethanol) is
extended for two years.
·
Bonus depreciation,
presently allowing companies to expense 50% of software and similar
qualifying property, is extended through 2017 at which point it is
phased down to 30% in 2019
·
Controlled foreign
corporations (CFCs) would continue to be allowed (for five years) to
defer income tax on royalties and dividends from business income of a
related CFC. This is commonly referred to as the “look-through rule.”
No Child Left Behind
Last week,
Congress successfully passed and the President signed into law, a bill
that significantly reforms the Bush Administration’s “No Child Left
Behind” policy. The law, called “the Every Student Succeeds Act” moves
authority over school evaluation programs and accountability from the
federal government back to states and local school districts. Local
entities will also have more say in setting their own goals.
Standardized testing for grades 3 to 8 would still be done annually.
However, high school students would be required to undergo only one
test. Finally, the legislation reauthorizes and/or creates new grant
programs for disadvantaged students, teacher preparation time,
parent-teacher engagement, facility maintenance and construction,
homeless youth, migrants, recruitment, literacy programs and charter
schools. The bill is estimated to authorize $124.2 billion over the
next five years. Discretionary costs are estimated to top $92.1
billion.
Surface Transportation
For the first
time since 2005, Congress was able to pass, and the President sign into
law, a long-term surface transportation bill. The Fixing America’s
Surface Transportation or FAST Act reauthorizes a number of highway and
transit projects for five years at an overall price tag of $305
billion. $225.2 billion of that amount is earmarked for highways
whereas $48.7 billion is intended for transit programs. A breakdown of
new and reauthorized programs, along with a list of new safety mandates
can be found here.
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