Georgia Tax Reform Report a Taxpayer Protection Pledge Violation

/PRNewswire/ -- Today Americans for Tax Reform announced that a vote in favor of the recommendations of the 2010 Special Council on Tax Reform and Fairness for Georgians would violate the Taxpayer Protection Pledge, as it constitutes a net tax increase. 55 Georgia lawmakers, including Governor Nathan Deal, House Speaker David Ralston, and Senate Majority Leader Chip Rogers have signed the Pledge, a written promise to constituents to oppose and vote against or veto all tax increases.

While the Council proposes some pro-growth reforms, such as the gradual reduction of personal and corporate income tax rates, they are more than offset with net tax increases. The income tax reductions amount to roughly $750 million in savings for Georgians, but tax increases on groceries, tobacco, communications services, the Internet and other services approach $2 billion. ATR believes that tax reform is a noble goal, but not when it constitutes a net revenue increase for state government.

ATR President Grover Norquist issued the following statement:

"In its current form, last week's tax reform proposal should be a non-starter for fiscal conservatives in the Georgia Legislature. While tax reform is indeed a laudable goal, it should not be presented in a way that increases the net burden on taxpayers and raises even more money for state government. Unfortunately, this report recommends just that.


"A significant reduction in marginal tax rates is long overdue in Georgia, which is wedged between two states – Tennessee and Florida – that levy no personal income tax at all. But if the goal is to use such reductions to mask bigger tax increases on groceries, tobacco, and a variety of services, it is not even worthy of a conversation.


"This is akin to shards of glass in a delicious creme brulee. It is a bit of desirable tax reform ruined by an overall tax hike. Thankfully, Taxpayer Protection Pledge signers run state government in Georgia. Because they have taken tax increases definitively off the table, I am confident that we can move past this initial foray into tax reform and begin a serious conversation about reducing the size and scope of state government in Atlanta." 

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Taxing the Internet

Remember the days when state taxes were not paid when you ordered that favorite item online?  It seems like times are changing.  How soon before all states tax the internet?  What do you think about this?

Internet Tax Bill Passed in Illinois

/PRNewswire/ -- The Internet Tax Bill (HB 3659) was passed in the Illinois Senate on January 5, by the House of Representatives on January 6 and brought to the Governor, who may sign it into a law as early as Friday, January 7.

The tax legislation relates to out-of-state merchants like Amazon.com and Overstock.com that do not have a physical presence in Illinois but have relationships with Illinois advertisers and publishers like CouponCabin.com. By this law, these merchants are deemed to have a presence (nexus) in Illinois and are therefore required to collect Illinois sales tax.

The goal of this is to increase tax revenue for the state, but what has happened in the four states that have passed similar laws (New York, Colorado, North Carolina and Rhode Island) is that instead of collecting sales tax, these merchants have severed their relationships with publishers in that state. Twelve other states have rejected similar legislation.

Statement from Scott Kluth, Founder and President of CouponCabin.com:

"Needless to say, we are disappointed by the passing of the legislation today. It was disheartening that both Houses passed this bill in 30 hours without a full and fair opportunity for the voice of Illinois small businesses to be heard. CouponCabin has been rapidly growing for the past several years; in fact, in November, we were only 12% behind Groupon's monthly traffic. For the third straight year, our staff has doubled in size and has already grown by 12% in the first week of 2011. Unfortunately, this bill will do significant harm to our growth by cutting our business by nearly one-third. Chicago has been an amazing home for CouponCabin for more than seven years. We are grounded in the community with our business and our charitable work and have no plans to leave. We hope the State will see that this bill will fail to achieve its revenue-raising goal, and instead cause drastic hardship for small businesses like ours. We know from other states' experience that the tax revenue does not materialize. Should this bill become a law, Internet affiliate jobs will be lost with no increase in state revenue. The other states that have passed this are moving to repeal it for this exact reason. We hope consideration will be given to the impact on small businesses before this bill becomes a law."

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Six-Point Economic Recovery Agenda Proposed

/PRNewswire/ -- As Congress returns next week, swing election issues such as job creation, economic recovery and acceleration of economic growth should be foremost on their agenda. The National Center for Policy Analysis (NCPA) and the Institute for Research on the Economics of Taxation (IRET) have proposed six pro-growth policies for immediate consideration:

* Extending the Bush tax cuts for everyone
* Allow immediate expensing of investment
* Extend the R&D tax credit and the patch for the alternative minimum tax (AMT)
* Reduce the corporate tax rate
* Eliminate individual and employer mandates to purchase insurance, and
* Repeal Medicare tax hikes.


Adopting these six policies are the most important step that Congress and the Administration can take to immediately and permanently reduce taxes on capital and labor, and therefore spur economic growth.

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Obama's Proposed Oil and Gas Tax Hikes to Cost U.S. Economy 154,000 Jobs in 2011

/PRNewswire/ -- Louisiana State University Endowed Chair of Banking and nationally-renowned economist Dr. Joseph R. Mason estimates that President Obama's proposed energy tax changes would trigger grave economic consequences. In the newly released "Regional and National Economic Impact of Repealing the Section 199 Tax Deduction and Dual-capacity Tax Credit for Oil and Gas Producers," Dr. Mason finds the resulting fallout over the next ten years would include:

-- Initial losses of over 154,000 jobs by the end of 2011, not only in
the energy sector but across the whole economy;
-- More than $341 billion in lost U.S. economic output; and
-- In excess of $68 billion in lost wages nationwide.


"As we've seen in its 2011 budget and newly unveiled 'stimulus' plans, the Obama administration aims to single out U.S. oil and gas firms and raise the cost of energy for consumers by eliminating crucial tax credits to which all taxpayers are entitled," Dr. Mason said.

"Though politicians think they are selectively targeting 'Big Oil' with these energy tax proposals, they would actually devastate thousands of small American businesses nationwide as well as the workers who depend on them. With at least 150,000 U.S. jobs at stake - in fields ranging from healthcare to real estate - it's clear that the costs of repealing Section 199 and dual capacity far outweigh the potential benefit of increased government revenues that may be derived from the proposal."

"The discriminatory energy tax increases proposed by the administration will destroy American jobs and raise the price of energy for consumers," president and CEO of the American Energy Alliance Tom Pyle said. "President Obama's proposed changes -- which would apply solely to oil and gas companies -- have little to do with the debate over offshore drilling safety or even energy policy in general. This tax grab merely represents punitive policies that are now finding a place in the sun in the post-BP oil spill crisis political environment."

Using the government's own economic model - the U.S. Commerce Department's RIMS II system - Dr. Mason provides incredibly conservative economic impacts. In fact, these already staggering estimates do not even include the effects of the proposed tax increases on individual investors. That means if Congress implements these proposed changes, the economic fallout could be even more substantial.

Dr. Mason's report was sponsored by Save U.S. Energy Jobs - a project of the AEA - established to help promote the nation's energy sector. To learn more and get exclusive information on upcoming projects, follow Save U.S. Energy Jobs on Twitter and Facebook.

Founded in May, 2008, The American Energy Alliance ("AEA") is a not-for-profit organization that engages in grassroots public policy advocacy and debate concerning energy and environmental policies. AEA is the advocacy arm of the Institute for Energy Research (IER), a not-for-profit organization - founded in 1989 - that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets.

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Firearms Industry Applauds Landslide Passage of Excise Tax Improvement Legislation in U.S. Senate

The National Shooting Sports Foundation (NSSF), trade association for the firearms, ammunition, hunting and shooting sports industry, hailed yesterday's passage of the Firearms Excise Tax Improvement Act of 2010 (H.R. 5552) by unanimous consent in the Senate.


The bill passed the House of Representatives at the end of June by a vote of 412-6. The House bill was sponsored by Rep. Ron Kind (D-Wisc.) and Rep. Paul Ryan (R-Wisc.). The Senate bill (S. 632) was sponsored by Sen. Max Baucus (D-Mont.) and had 30 cosponsors, including lead co-sponsor Sen. Mike Crapo (R-Idaho) who co-chairs the Congressional Sportsmen's Caucus.


This legislation corrects a longstanding inequity in the Internal Revenue Code by permitting firearm and ammunition manufacturers to pay the federal excise tax payment on a quarterly basis, just as other industries that support conservation through a federal excise tax do. Currently, firearms and ammunition manufacturers pay this tax on a bi-weekly schedule, forcing many manufacturers to borrow money to ensure on-time payment. Industry members spend thousands of staff-hours administering the necessary paperwork to successfully complete the bi-weekly tax payments--monies that are due to the federal government long before manufacturers are paid by their customers.


Importantly, HR 5552 pays for itself and does not add to the budget deficit. Nor does the bill lower the amount of conservation dollars collected by lowering the tax rate. It simply adjusts the payment schedule to a quarterly period.


"This bill strengthens wildlife conservation funding in America," said NSSF Senior Vice President and General Counsel Lawrence G. Keane. "By enabling manufacturers to grow their businesses, excise tax receipts will actually grow. We are thankful for the tremendous support and leadership of Senators Max Baucus and Mike Crapo. Clearly, their vision in championing this bipartisan, pro-conservation, pro-business legislation allowed for smooth passage of the bill."


Keane added, "We also want to thank Majority Leader Harry Reid for expediting the legislative process by allowing the Senate to vote on the House-passed version of the bill. Senator Reid has long supported and fought for issues important to our industry and for hunters and gun owners both in Nevada and across the United States."


The firearm and ammunition excise tax is the major revenue source for funding the Wildlife Restoration Trust Fund (also known as the Pittman-Robertson Trust Fund). Last year, firearm and ammunition manufacturers contributed approximately $450 million to wildlife conservation through excise tax payments.


Passage of HR 5552 would not have been possible without the hard work of many organizations, including a broad coalition of more than 35 conservation groups that are members of the American Wildlife Conservation Partners. This coalition includes the National Rifle Association, Ducks Unlimited, Safari Club International and the Congressional Sportsmen's Foundation, which made passage of this bill a priority.


The U.S. Fish and Wildlife Service and the Association of Fish and Wildlife Agencies also supported this legislation as did the Internal Revenue Service-Tax and Trade Bureau, which collects the excise tax. There is no organized opposition to this legislation.


"With passage of excise tax improvement in the House and Senate, it is our hope that President Obama will act fast to sign this legislation into law," said Keane.


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NY Coalition Opposes Governor Paterson's Proposed Sugar Sweetened Beverage Tax

/PRNewswire/ -- New Yorkers Against Unfair Taxes, a coalition formed in opposition to taxes on food and beverage products, today announced its disappointment in Governor Paterson's proposal to place a tax on sugar sweetened beverages of 12 cents per 12-ounce can. This tax would be 10 times higher on a 12 pack of non-alcoholic beverages, like soft drinks, than the state tax on a 12 pack of alcoholic beverages, like beer.

The coalition's members -- including thousands of New York residents across the state and business groups such as the New York State Restaurant Association, The New York Association of Convenience Stores, The Business Council of New York State and The National Supermarket Association -- agree that this is not the time to tax the groceries of hardworking New Yorkers. Last year Gov. Paterson claimed to have heard the voices of the New York people, but once again he is trying to fix his budget problems by taxing New Yorkers and putting thousands of instate jobs at risk.

"New Yorkers are struggling to make ends meet in this economy and we shouldn't bear the burden of fixing the Governor's budget problems," said Nelson Eusebio, Chairman of New Yorkers Against Unfair Taxes. "Another tax will be detrimental to hardworking New York businesses and residents."

The beverage industry currently supports thousands of well-paying jobs in New York, totaling some $6.7 billion in wages. These statewide jobs are held by hardworking New Yorkers in manufacturing, distribution and retail. The non-alcoholic beverage industry in New York State has a direct economic impact of $7 billion per year and supports an additional $18 billion in economic activity.

New Yorkers can join the coalition's fight at www.nobeveragetax.com in order to declare their support, sign the petition, and make their opposition known to the Governor and their State Representatives.

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CCH Briefing Details House Estate Tax Measure

/PRNewswire/ -- Following passage by the House of Representatives on December 3, 2009 of the Permanent Estate Tax Relief for Families, Farmers, and Small Business Act of 2009, CCH has issued a Special Tax Briefing on its provisions which, if adopted by the Senate, will provide certainty for estate taxes and estate planning, largely by freezing the status quo as of this year. Read the Briefing at http://tax.cchgroup.com/Legislation/2009-Estate-Tax-Relief.pdf.

"The House bill provides for a $3.5 million estate tax exclusion with no portability, a top estate tax rate of 45 percent, a continuation of stepped-up basis and ratifies the permanent repeal of the state death tax credit," said CCH Senior Estate Planning Analyst Bruno Graziano, JD, MSA.

The measure moves on to the Senate, where the bill's lack of indexing for inflation may pose a difficulty, but many observers believe some kind of estate tax "fix" is imperative this year.

"Without some new legislation in place, 2010 would see the complete abolition of the estate tax - for that year alone - but also a move to a 'modified carryover basis' system for valuing inherited assets that could increase the income tax burden of beneficiaries and would be very difficult for executors and accountants to deal with," Graziano said.

The Briefing also details the impact of the House bill on the gift tax and generation-skipping transfer tax.

CCH Tax Briefings

To read the Briefing, visit http://tax.cchgroup.com/Legislation/2009-Estate-Tax-Relief.pdf. Timely, current analysis of this and other tax legislation can be found at CCH Tax Legislation Coverage (http://tax.cchgroup.com/Legislation/Briefings).

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Senate Mandatory Health-Insurance Bill Infringes on Choice and Privacy

/PRNewswire/ -- The Senate's newly released health-reform bill ("Patient Protection and Affordable Care Act") infringes on Americans' health-insurance choices and medical privacy, says Sue Blevins, president of the Institute for Health Freedom (IHF) -- a patients' rights group in Washington, D.C.

The bill would (among many other provisions):

-- Require nearly every legal resident to buy government-sanctioned
health insurance;
-- Increase Medicare payroll taxes on individuals earning over $200,000
per year and couples earning over $250,000 per year (raising $54
billion in taxes over 10 years);
-- Slap a new tax on "Cadillac" health plans (high-cost plans offered by
employers to their employees) -- raising $149 billion in taxes over 10
years (2010-2019); and
-- Finish laying the building blocks for a computerized "Nationwide
Health Information Network" (NHIN) without patients' consent.


Section 937 of the bill, titled "Dissemination and Building Capacity for Research," includes the following provision:

''(f) BUILDING DATA FOR RESEARCH.--The Secretary [of Health and Human Services] shall provide for the coordination of relevant Federal health programs to build data capacity for comparative clinical effectiveness research, including the development and use of clinical registries and health outcomes research data networks, in order to develop and maintain a comprehensive, interoperable data network to collect, link, and analyze data on outcomes and effectiveness from multiple sources, including electronic health records." [Emphasis added.] (See pages 1683-684 of the bill.)

Dissemination of the collected data will be governed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy rule, which actually permits patients' personal health information to be shared among more than 600,000 organizations without patients' consent. "Combining a mandatory national electronic medical-records data network with the so-called HIPAA privacy rule means patients will lose control over the flow of their personal health information," says Robin Kaigh, an attorney and medical-privacy advocate. "The only way to ensure that patients control their personal health data is to make sure patient consent is obtained before data can be shared."

IHF points out that Dr. Bernadine Healy, former head of the National Institutes of Health, recently stressed in U.S. News & World Report:

"...[T]he doctor-patient relationship was never meant to be other than confidential and privileged and solely for the benefit of the patient. Patients expect it, or they would not be forthcoming. And doctors take the Hippocratic oath, pledging to hold sacred their patients' secrets. This pledge of confidentiality, however, is now challenged by a world where computers rule and health information falls into many hands. One might well ask whether medical privacy is just too outmoded a concept for today's information-hungry world. We had better decide...."

Do you really wish to have your personal health information become part of a Nationwide Health Information Network without your consent?

IHF is encouraging citizens to call their Senators as soon as possible and tell them to "vote no on a motion to proceed" on Senator Reid's mandatory health-insurance bill, because it infringes on patients' choice and privacy.

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Taxpayer Group Launches Petition to Ask Sen. Ben Nelson to Keep His Pledge

PRNewswire/ -- Today, Americans for Tax Reform (ATR) continued its pressure on Sen. Ben Nelson (D-Neb.) by releasing an online petition asking him to oppose the Senate healthcare bill because it violates the Taxpayer Protection Pledge.

The petition, found at www.nohealthcaretaxes.org, urges Sen. Nelson to be a "no" vote on any procedural votes and/or final passage votes on this anti-taxpayer piece of legislation. The petition also reminds him that a failure to do so would be a breach of trust between him and the people of Nebraska.

"Sen. Nelson has shown the courage of his convictions. He is alone among Senators to have taken the Pledge as a Democrat," said Grover Norquist, president of Americans for Tax Reform. "The pressure is building now to break that Pledge, however. Majority Leader Harry Reid is pressing his caucus to deliver a healthcare bill, and it appears more and more likely he will not have a single Republican to lend a 'bipartisan' label to the government healthcare bill. Sen. Nelson needs encouragement to know that he's not standing alone in the face of this pressure."

The petition follows up on ATR's recent launch of a series of television ads encouraging the Senator to oppose the healthcare bill. The ads will run on both local and national news and commentary broadcast for three weeks, reflecting the significance of Sen. Nelson's vote to prevent tax increases as part of the healthcare bill.

"It's clear with Harry Reid's decision to include the public option in any healthcare legislation going to the floor that every Democrat vote is required to pass cloture. Now is the time for Sen. Nelson to follow through on the promise he made to get elected and stand by the Taxpayers," continued Norquist.

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases. For more information or to arrange an interview please contact John Kartch at (202) 785-0266 or by email at jkartch@atr.org.

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Congress Encouraged to Collect Billions in New Revenue with Internet Gambling Regulation in New Advertising Campaign

/PRNewswire/ -- The Safe and Secure Internet Gambling Initiative launched a new online advertising campaign today in support of the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2009 (H.R. 2267), legislation that would establish a framework to permit licensed gambling operators to accept wagers from individuals in the U.S. The ads advocate regulating Internet gambling to protect the millions of Americans who continue to gamble online despite government attempts to prohibit the activity and to collect up to $62.7 billion in new revenues for the federal government in the first decade.

"As Congress searches for ways to pay for health care reform and other worthy programs, it should end the unsuccessful prohibition of Internet gambling and start collecting taxes on the billions in revenue currently lost to unlicensed, offshore gambling operators," said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative.

House Committee of Financial Services Chairman Barney Frank (D-MA) has announced his intent to hold a hearing and markup on the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2009 this fall. Since introduction of the legislation by Chairman Frank in May, a bipartisan group of more than 50 co-sponsors have signed onto the bill. Supporters include many senior ranking representatives such as George Miller (D-CA), chairman of the Committee on Education and Labor, John Conyers (D-MI), chairman of the Committee on the Judiciary, Charles Rangel (D-NY), chairman of the Committee on Ways and Means, Edolphus Towns (D-NY), chairman of the Committee on Oversight and Government Reform, Pete King (R-NY), ranking member of the Homeland Security Committee and Ron Paul (R-TX), vice-chairman of the Oversight and Investigations subcommittee.

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Obama's 'Specific' Healthcare Speech: Will He Disavow Pledge-Breaking Tax Hikes in House Dem Health Bill?

/PRNewswire/ -- There are four tax hikes in the House Democrat healthcare bill (H.R. 3200) that violate President Obama's promise not to raise "any form" of taxes on families making less than $250,000 per year. The White House has told reporters that Obama is going to get specific on healthcare policy in a speech next week, which begs the question:

If Obama is serious about keeping his central campaign promise, will he disavow the four pledge-breaking provisions in the House Democrat healthcare bill? They are as follows:

Restrictions on tax-deductible purchases of over-the-counter medicines with health spending accounts like FSAs and HSAs. This isn't in the original H.R. 3200, but it did make it into Charlie Rangel's "Chairman's Mark." The description can be found at www.jct.gov, and it's document JCX-32-09. The 8 million Americans who have a health savings account (HSA) and 30 million Americans who have a health flexible spending account (FSA) will no longer be able to buy over-the-counter medicines (aspirin, etc.) on a pre-tax basis. Contrary to the Obama rhetoric, this would change the plan people currently have, and raises their taxes in the process. This affects anyone with these types of accounts, not just those making more than $250,000 per year.

Tax on Individuals Not Enrolled in Health Insurance (Page 167): Those who don't enroll in a health insurance plan will have to pay a new tax equal to 2.5% of income. If they earn $40,000 a year and don't have health insurance, they will have to pay tax of $1000. Notice how this tax affects all individuals, not just those making more than $250,000 per year.

Tax on Businesses Not Offering Health Insurance (Page 183): If a business has a payroll of at least $500,000 and does not offer health insurance, it will be compelled to pay a new payroll tax of 8 percent. It doesn't matter if the business is profitable or running a loss. Small businesses pay taxes on their owners' 1040s. This will affect thousands of small businesses with profits of less than $250,000 per year.

IRS Can Disallow Perfectly Legal Tax Deductions They Just Don't Like (Page 207): If a taxpayer (including one making less than $250,000 per year) uses a perfectly-legal tax deduction the IRS doesn't like, the IRS will be empowered to simply disallow it. The only reason the IRS has to give is that the tax break lacks "economic substance" -- that is, the taxpayer is not taking the deduction for "substantial" or "business" reasons. For those wanting to engage in a legal activity to cut their tax bill, the IRS wins no matter what.

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Westmoreland: Bill to tax AIG bonuses a cynical ploy

U.S. Rep. Lynn Westmoreland today voted against congressional Democrats cynical tax plan for AIG bonuses.

“House and Senate Democrats messed up big time and now they want to tinker with the tax code as part of a public relations stunt,” Westmoreland said after the vote. “I know Americans want to punish executives who are getting taxpayer dollars as bonuses – I know it because I’m just as outraged. But honest members of Congress have a duty to stand up against these shenanigans and explain to Americans that Democrats messed up and now they’re trying to sweep it under the rug.”

The legislation imposes a retroactive 90 percent tax for bonuses received since Jan. 1 by an employee of any company that has received more than $5 billion from federal bailouts. Language protecting these bonuses in the so-called stimulus package was written entirely by Democrats and signed by President Obama.

“I voted against the stimulus that allowed these bonuses and I voted against the TARP legislation that funded these bonuses,” Westmoreland said. “As I’ve said on the floor of the House, we don’t know what would have happened if Congress hadn’t passed TARP, but we do know that AIG’s employees wouldn’t be getting bonuses because they wouldn’t have jobs.

“I didn’t vote ‘no’ today because I support bonuses for AIG employees. I voted no because I can’t support using the tax code retroactively to punish a particular group or to score political points. I don’t want American taxpayers to get back 90 percent of the bonuses; I want them to get back 100 percent of the hundreds of billions they have doled out to corporations whose bad decisions have blown a gaping hole into the global economy.”

Watch Rep. Westmoreland’s video on the AIG vote: http://www.youtube.com/watch?v=Mbrk37ofKHM
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Pelosi Statement on AIG Legislation on House Floor Tomorrow

/PRNewswire-USNewswire/ -- Speaker Nancy Pelosi issued the following statement tonight on legislation the House will vote on tomorrow to hold companies, including American International Group (AIG), accountable for the bonuses that were paid to their executives. The legislation will recover the bulk of these bonuses by taxing them at a rate of 90 percent. Below the Speaker's statement is a brief fact sheet on HR 1586.

"We must stabilize the financial system in order to strengthen our economy and create jobs. We must also protect the American taxpayer from executives who would use their companies' second chances as opportunities for private gain.

"Because they could not use sound judgment in the use of taxpayer funds, these AIG executives will pay the Treasury in the form of this tax. I urge all my colleagues to vote in favor of this legislation and in favor of recovering taxpayer dollars and protecting Americans from the continued poor judgment of some of America's largest companies."

* * * * * *

As a result of extraordinary abuses of the public trust by companies rewarding employees with excessive compensation while receiving billions in taxpayer assistance, Congress introduced legislation to recover taxpayers' dollars.

The bill would apply a separate income tax rate of 90 percent to bonuses received by individuals from companies which have received at least $5 billion from TARP. It would also apply to bonuses paid by Fannie Mae and Freddie Mac.

For this purpose, bonuses will be defined as any retention payment, incentive payment, or other bonus which is in addition to regular employee compensation payable on a periodic basis.

The special tax rate only would apply to individuals and families with overall income (including income other than bonuses) in excess of $250,000.

The bill applies to payments received after December 31, 2008.

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Boehner Responds to President’s Request for Bipartisan Budget Proposals

House Republican Leader John Boehner (R-OH) today released a video responding to President Obama’s request yesterday for bipartisan budget proposals. In the video, which was transmitted to the White House this morning, Boehner respectfully informs the President that his budget spends too much, taxes too much, and borrows too much; makes clear that Republicans will offer a superior alternative, as Republicans did during the “stimulus” debate in January; and outlines the GOP principles for a better budget. A transcript of Boehner’s message to President Obama follows:

“Families and small businesses across America are hurting, and they’re counting on both parties in Washington to provide real solutions to help create jobs and end this recession. Mr. President, you’ve submitted your budget, and we appreciate you seeking input from Republicans on how it can be improved.

“As you’ll recall, our Republican Whip Eric Cantor and I personally delivered to you our Republican stimulus alternative during a White House meeting. Unfortunately, that plan was rejected by Washington Democrats, even though it would have created 6.2 million jobs according to an economic model developed by your own advisor, Dr. Christina Romer. That’s twice the jobs at half the cost of the trillion-dollar spending bill you ultimately signed into law.

“Republicans are eager to offer better solutions on the budget as well. Mr. President, with all due respect: your budget spends too much, taxes too much, and borrows too much, and that’s going to do further harm to our economy at a time when it desperately needs our help.

“We believe there’s a better way – better solutions to restore some fiscal sanity here in Washington while encouraging more job creation and more investment. Our alternative, which is being drafted as we speak by Congressman Paul Ryan of Wisconsin and others, will reflect core principles that should guide us as our nation works to emerge from this crisis stronger than ever.

“First, our budget alternative will help create and protect jobs by letting families and small businesses keep more of what they earn.

“Second, our budget will make sure the federal budget doesn’t grow faster than family budgets. Americans are making tough spending decisions every day. It’s time for Washington to do the same.

“Third, our budget will aim to expand access to affordable health care for every American, while preserving Social Security and Medicare for future generations.

“Fourth, our budget will end the bailouts to protect taxpayers and reform the financial system so this crisis never repeats itself. Instead of raising energy costs through a “cap and trade” energy tax that will cost every family up to $3,100 a year, our budget will encourage an “all of the above” energy strategy that harnesses new technologies, encourages greater conservation and efficiency, and increases American energy production in an environmentally-safe manner.

“And last but not least, our budget will fight inflation so the prices of goods and services Americans depend on every day remain stable during and after this economic crisis.

“Mr. President, we appreciate the opportunity to answer your call for bipartisan input by sharing our Republican budget solutions. Republicans are eager to offer our alternative when the debate continues in Congress later this month. It’s time for both parties in Washington to work together to tackle the challenges confronting our nation – and we shouldn’t wait a moment longer to start.”

NOTE: In remarks on the budget at the White House yesterday, President Obama said, “The answers don’t have to be partisan, and I welcome and encourage proposals and improvements from both Democrats and Republicans in the coming days.”

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Bauer Calls Taxpayer-Funded Embryonic Stem Cell Research 'A Tragedy'

/PRNewswire/ -- Former Presidential candidate Gary Bauer on Monday called Barack Obama's decision to waste federal tax dollars on failed embryonic stem cell research "evidence that ideology is the goal here, not saving lives. We are witnessing the beginnings of a tragedy, as lives will be lost and not saved as a result of this change."

The president of American Values made the following statement: "It's tragic that Barack Obama is willing to take tax money from struggling Americans and give it to scientists working on repeatedly failed embryonic stem cell projects...especially as adult stem cell research is yielding real, life-saving results. Most people do not understand that there is no restriction against fetal stem cell research, just a restriction against spending tax dollars to destroy human embryos for a body of work that has resulted in cancers and abnormal cells time and time again. Adult stem cell research, on the other hand, has provided real hope to many patients. In 2008, the National Institutes of Health spent nearly one billion dollars on stem cell research, most of it going to adult stem cell research because of the real hope it offered.

"This policy shift is part of an anti-life agenda that now will allow human embryos to be destroyed to create cell lines. My concern is that the long-term result of this work will lead to a lifting of the ban against human cloning, a development that would allow testing in laboratories on human embryos, human life. But today, Obama's decision to allow federal tax dollars to be used to destroy human embryos is tragic on many levels. He raises false hope for those who are ill; he strains the American taxpayer at a time of economic crisis, and he ignores the humanity of the lives ended in cold laboratories to satisfy a liberal ideology."

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Congress to Vote on 'Cap-and-Trade' Legislation by Summer

/PRNewswire/ -- Two weeks after President Obama challenged Congress to send him a bill that "places a market-based cap on carbon pollution and drives the production of more renewable energy," House and Senate leaders responded with an ambitious timetable for new "cap-and-trade" legislation, including a final Senate vote by the end of summer.

Under a cap-and-trade system a "price" for emitting pollution into the atmosphere is established but companies are able to freely trade their greenhouse gas emissions in an open market. Burning coal or natural gas to generate electric power becomes more expensive - and renewable sources of energy like wind and solar that much more competitive.

Rep. Henry Waxman (D-Calif.) chair of the Energy & Commerce Committee, said he intends to have a cap-and-trade bill ready by late June. Sen. Majority Leader Harry Reid (D-Nev.) promised comprehensive energy legislation including cap-and-trade laws will be put to a vote this August.

For wind power developers, cap-and-trade legislation is expected to lead to even faster growth in an industry already coming off its best year ever in 2008. Argus Research confirmed its buy rating on AES (NYSE:AES) . AES operates Buffalo Gap, one of the largest wind farms in Texas. Monday analysts at Argus stated AES "continues to have strong growth prospects."

CNBC guest analyst Francis Gaskins has a buy rating on NACEL Energy (OTC Bulletin Board: NCEN) which has four wind projects underway in Texas. Gaskins' research note indicated NACEL "represents a unique opportunity for investors interested in exposure to the sector," and puts a $4 valuation on the Company.

The imminent passage of cap-and-trade laws likely means more solar PV manufacturers will acquire or develop their own power projects. Monday First Solar (NASDAQ:FSLR) bought OptiSolar's pipeline of utility scale projects. Rival SunPower (NASDAQ:SPWRA) announced its own plans for new solar power projects in Florida and California last year. Following First Solar's purchase Lazard issued a buy on the Company and raised its target price to $145.

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RNC: Wrong Prescription

The following was released today by the Republican National Committee:

Today, President Obama Will Make A Formal Announcement That President Obama Will Nominate Gov. Kathleen Sebelius (D-KS) For HHS Secretary:

Today, President Obama Will Announce Sebelius As His Secretary Of Health And Human Services. "Kansas Gov. Kathleen Sebelius yesterday accepted President Obama's request to become his secretary of health and human services, stepping into a central role in the new administration's ambitious effort to overhaul the nation's health-care system. ... A formal announcement of her nomination is scheduled for tomorrow." (Michael A. Fletcher and Ceci Connolly, "Governor Of Kansas Tapped To Lead HHS," The Washington Post, 3/1/09)

Democrats Have Already Announced Plans For Billions In New Taxes To Fund Health Care:

Last Week, President Obama Proposed A $634 Billion Reserve Fund For Health Care, That Experts Believe Will Cost At Least $1 Trillion. "President Obama is proposing to begin a vast expansion of the U.S. health-care system by creating a $634 billion reserve fund over the next decade, launching an overhaul that most experts project will ultimately cost at least $1 trillion. The 'reserve fund' in the budget proposal being released today is Obama's attempt to demonstrate how the country could extend health insurance to millions more Americans and at the same time begin to control escalating medical bills that threaten the solvency of families, businesses and the government." (Ceci Connolly, "Obama Proposes $634 Billion Fund For Health Care," The Washington Post, 2/26/09)

Democrats Plan To Pay For The Reserve Fund By Capping Tax Deductions, Amounting In A Tax Increase Of More Than $300 Billion. "About half the money for the new fund would come by capping itemized tax deductions for Americans in the top income bracket. The proposal, which administration officials characterize as a 'shared-responsibility issue,' would reduce the value of tax deductions for families earning more than $250,000 by about 20 percent, according to administration documents." (Ceci Connolly, "Obama Proposes $634 Billion Fund For Health Care," The Washington Post, 2/26/09)

SEBELIUS HAS A HISTORY OF "TWISTING ARMS" TO RAISE TAXES

Kansas Has A High Tax Burden:


Kansas Ranks In The Bottom Half Of States For State Business Tax Climate. "Kansas ranks 31st in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states were as follows: Nebraska (42nd), Missouri (16th), Oklahoma (18th), and Colorado (13th)." (The Tax Foundation Website, www.taxfoundation.org, Accessed 3/1/09)

Kansas Has The 13th Highest Property Tax Burden. The American Legislative Exchange Council ranks Kansas 38th among states' property tax burdens, with 1st being the lowest, and 50th being the highest. (Arthur B. Laffer and Stephen Moore, American Legislative Exchange Council, "Rich States Poor States: ALEC-Laffer State Economic Competitiveness Index," www.alec.org, 2007, p.71)

Sebelius' Solution To High Taxes Is To Raise More Taxes:

Sebelius Has Called For Hiking The State Sales Tax 8%, The Income Tax By 5%, And Property Tax 10%. "The governor proposes to: Increase the state's sales tax rate from 5.3 to 5.5 percent on July 1, to 5.6 percent in 2005 and to 5.7 percent in 2006. Impose a 5 percent surcharge on personal income taxes, with no expiration date specified. Raise the state's 20-mill property tax levy for schools to 21 mills in 2005 and to 22 mills in 2007." (Chris Moon, "Governor's Plan Would Raise Three Kinds Of Taxes," Topeka [KS] Capital-Journal, 2/26/04)

-- Her Plan Would Have Raised Over $600 Million In New Taxes. "[G]ov.
Kathleen Sebelius, a Democrat, would raise income, sales and property
taxes and spend $663 million more on public schools over the next
three years." (Jim Sullinger and John L. Petterson, "It's GOP's Turn
At School Finance," The Kansas City Star, 3/13/04)

Already This Year, Sebelius Has Come Out In Favor Of A $0.50 Per Pack Cigarette Tax Increase, Saying She'd Be "Twisting Arms" To Help Pass It. "Gov. Kathleen Sebelius [advocated] proposals that include a 50-cent per pack increase in the state cigarette tax. 'I will be campaigning for this, urging people to do it, twisting arms to do it,' Sebelius said." (Scott Rothschild, "Sebelius, Barnett Join Forces On Tobacco Tax," Lawrence [KS] Journal-World & News, 1/10/08)

SEBELIUS VETOED EFFORTS TO STOP EXCESSIVE LITIGATION FROM HARMING BUSINESSES AND HEALTH CARE

Litigation Is A Growing Problem For Kansas Businesses:

A 2005 Poll Found That 72% Of Kansas Business Leaders Believe Frivolous Lawsuits Drive Up Business Costs. "A recent Kansas Chamber of Commerce poll of the state's business owners and executives indicated that 72% of business leaders strongly believe that frivolous lawsuits drives up their costs of doing business." (The Attorney General Of Kansas, "Attorney General Kline, Insurance Commissioner Praeger Work To Ensure No 'Medical Liability Crisis,'" Press Release, 3/4/05)

Since Sebelius Took Office, Kansas Has Dropped Six Places In The U.S. Chamber Of Commerce Institute For Legal Reforms State Ranks. Since 2002, Kansas has dropped from rank four to rank ten, or six places. (Kansas Chamber Of Commerce, "Kansas Chamber Legal Institute," www.kansaschamber.org, 8/9/04; U.S. Chamber Of Commerce Website, Institute For Legal Reform, www.instituteforlegalreform.com, Accessed 3/1/09)

Sebelius Vetoed Efforts To Reduced Medical Liability Insurance Costs In A State Which Is "Showing Problem Signs":

The American Medical Association States Kansas Is "Showing Problem Signs," Due To Rising Medical Liability Rates. (Sherman Joyce, "Election Should Lead To Strong Legal Reform," The Wichita [KS] Eagle, 11/16/04)

But In 2007, Sebelius Vetoed Legislation, Making It Easier To Sue Physicians In Consumer Protection Cases. "Gov. Kathleen Sebelius ... vetoed a bill that she said would have exempted health care providers, including doctors, from the Kansas Consumer Protection Act. ... The Kansas Medical Society issued a statement saying it was 'very disappointed' in Sebelius' veto. ... Without the bill, they said, more litigation will occur and that would lead to higher malpractice premiums for health care providers, which will be passed on to consumers." (Scott Rothschild, "Sebelius Vetoes Bill Sought By Doctors," The [Lawrence, KS] Journal-World, 4/21/07)

SEBELIUS SUPPORTS BIG LABOR AND TRIAL LAWYERS OVER KANSAS WORKERS AND BUSINESSES

Sebelius: In Pocket Of Trial Lawyers:

Sebelius Was Executive Director Of Kansas Trial Lawyers Association From 1978-1986. ("Gubernatorial Candidates On Tuesday's Primary Ballot," The Associated Press, 8/2/02)

Sebelius: "Perhaps My Objectivity Has Been Seriously Compromised By My Trial Lawyers Employment, But The Premise That People Are Too Eager To Use The Courts Seems Hollow To Me." (Kathleen Sebelius, "And From The Director," Journal Of Kansas Trial Lawyers Association, Volume V, #1, p. 2, 2/81)

Sebelius Has Received At Least $898,707 From Lawyers & Lobbyists. (The Institute For Money In Politics, www.followthemoney.org, Accessed 1/22/08)

In Her 2006 And 2002 Races For Governor, Lawyers And Lobbyists Were The Top Economic Sector Contributing To Her Campaign. (The Institute For Money In Politics, www.followthemoney.org, Accessed 1/22/08)

Sebelius: In Pocket Of Big Labor:

Sebelius Has Received At Least $564,495 From Big Labor. (The Institute For Money In Politics, www.followthemoney.org, Accessed 1/22/08)

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Statement by Robert Greenstein, Executive Director, Center on Budget and Policy Priorities, on the President's 2010 Budget Proposal

/PRNewswire-USNewswire/ -- The following is a statement by Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities:

The President's budget represents a bold and courageous proposal to make progress in restoring fiscal discipline while addressing two central problems of our time -- a broken health care system and the threat of catastrophic global warming -- and other national needs.

Particularly courageous are several proposals that take on vested interests to fully pay for the costs of health care reform and tackling global warming, including:

-- Instituting major cost-saving reforms in Medicare that also hold
promise for slowing private-sector health care costs and are
consistent with recommendations of Congress' expert advisory body, the
Medicare Payment Advisory Commission. Faced with intense opposition
from insurance companies and other interests, Congress has shied away
from such proposals, but the new Administration has embraced them.
The budget also includes a sound, longstanding Republican proposal --
to increase the premiums that affluent Medicare beneficiaries pay for
the prescription drug benefit that Medicare provides them.
-- Limiting various tax subsidies to the most affluent Americans to 28
cents on the dollar. Currently, middle-income Americans receive a tax
subsidy equal to 10 cents or 15 cents for each dollar of their
deductible expenses (if they itemize deductions at all), while
affluent Americans get a subsidy of 35 cents for each dollar of the
same expenses. The budget would cap the subsidy at 28 cents on the
dollar for those with incomes over $250,000, the same rate at which
those expenses could be deducted in the final Reagan years, when the
top tax rates were lower. As a result, incentives to incur those
expenses would be the same as under President Reagan.
-- Auctioning all emissions permits under the Administration's proposed
cap-and-trade system to address global warming, rather than conferring
windfall profits on energy companies and others that pollute by giving
them tens of billions of dollars' worth of permits for free. The
proposal would then use auction proceeds to offset the impact on
working families of the resulting increases in energy prices, by
extending the Making Work Pay tax cut. (This tax cut is similar to
tax-reduction proposals of recent years by a number of analysts,
including those here at CBPP, to efficiently provide middle-income
consumers with relief from the increased energy costs that an
emissions cap would trigger.) Additional measures will be required to
provide adequate relief to low-income consumers; the budget envisions
using some of the remaining auction proceeds for that.


The budget also makes a significant commitment to restoring fiscal responsibility while meeting high priority national needs, by:

-- Reducing deficits to 3 percent of the Gross Domestic Product by 2013,
about the level needed to keep the federal debt from rising much
faster than the economy and thus leading to an explosion of debt that
swamps the budget and the economy.
-- Pledging to offset the costs over the next ten years of health care
reforms that initially will raise costs by providing universal
coverage but that will set the stage for reducing public- and
private-sector health care costs in subsequent decades by gradually
slowing the rate at which those costs grow. The high rate of growth
of health-care costs is at the root of the nation's long-term fiscal
problem.


By themselves, these budget proposals would prove insufficient to keep deficits at 3 percent of GDP indefinitely. Policymakers will need to take additional steps in subsequent years, as President Obama noted at his "fiscal summit" on Monday.

The budget also deserves high marks for transparency and honesty. Gone are the gimmicks that have been an annual feature of both Presidential and Congressional budgets, under which policymakers pretended to reduce deficits markedly over time by omitting costs in the "out years" for operations in Iraq and Afghanistan, natural disasters, and continued relief from the Alternative Minimum Tax and the scheduled reductions in Medicare fees for doctors -- and by printing in the budget numbers for the costs of discretionary programs in the out years that everyone knew were unrealistically low.

Those gimmicks, sleights-of-hand, and convenient omissions are absent from this budget. Its greater realism and transparency makes the President's pledge to cut the deficit in half in four years a meaningful one; we will now know each year whether we are on course to meet that goal.

The budget also provides needed investments in key areas for long-term economic growth, such as energy efficiency and early childhood education. And it proposes savings from lower priority programs such as bloated agricultural subsidies and from unwarranted tax breaks, such as one that millionaire equity fund managers have exploited to pay taxes at lower rates than many middle-income families and others that benefit oil companies. The budget also follows in the tradition of the 1990 and 1993 deficit-reduction laws in both shrinking the deficit and reducing poverty, which is higher in the United States than in other Western nations.

Predictable but Unfounded Criticisms

The budget already is facing several lines of attack that rest on inaccurate or misleading charges. Chief among them is the claim that the tax increases for people who make over $250,000 will seriously injure small businesses.

In fact, small businesses would win under this budget. Tax Policy Center data show that fewer than one in every ten people with small business income have incomes over $250,000, the only group that faces higher taxes under this budget. Moreover, many people with small business income who are in this category are wealthy individuals who have invested in businesses, but who are not proprietors and have little or nothing to do with running those businesses. The vast majority of small business owners are middle-income individuals who would receive tax cuts under the budget; many of them would also benefit from its universal coverage and health care cost containment reforms.

To be sure, many will oppose various proposals to close tax loopholes, the Medicare and agricultural subsidy reforms, and the cap on the value of itemized deductions for the most affluent Americans -- while saying that they, too, favor universal health coverage, curbing global warming, improvements in education, and the like. This budget challenges them to propose their own ways to finance such measures.

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Boehner Warns Raising Taxes in a Recession Will Hurt Economy, Destroy Jobs

House Republican Leader John Boehner (R-OH) yesterday issued the following statement reacting to media reports that President Obama's budget proposal will increase taxes on families and small businesses during a recession, and rely heavily on military spending cuts at a time when America is fighting a war against international terrorism and radical jihadism:

“Back in November, I urged then-President-elect Obama to take tax hikes off the table, warning that raising taxes in a recession will further hurt the economy and endanger jobs. I’m very concerned by reports that raising taxes on families and small businesses in a recession will be the centerpiece of the President’s first budget. I’m also troubled by reports that the budget relies heavily on military spending cuts, which could jeopardize our troops and their ability to complete their missions safely and successfully.

“Raising taxes on families and small businesses in a recession will do further damage to the economy, discouraging families from working and threatening the very jobs the President wants to help our economy create. Americans are wise enough to know that the additional money being taken out of their paychecks will not go to deficit reduction; in the hands of Democratic congressional leaders, it will be squandered on inefficient government programs and wasteful pork-barrel projects. It happened two weeks ago, and is slated to happen again this week as Democratic congressional leaders rush to the floor legislation that includes the largest discretionary spending hike since Jimmy Carter.

“Stopping out-of-control spending here in Washington, not increasing taxes on families and small businesses or endangering our troops and their mission, is the responsible way to tackle the deficit.”

NOTE: In a November 23, 2008 appearance on Fox News Sunday, Boehner urged then-President-elect Obama not to raise taxes during the recession, asking host Chris Wallace, “If we want to create jobs now and we want to create certainty now, why wouldn’t we lower taxes? And, if we really want to help the economy, why wouldn’t we have the President-Elect say, ‘I’m not going to raise taxes on any American my first two years in office?’”

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CCH Special Tax Briefing: Final Stimulus Plan Provides Tax Breaks for Individuals, Businesses, Environment, Government

/PRNewswire/ -- Senate and House conferees have agreed on the final provisions of The American Recovery and Reinvestment Act of 2009, the major "economic stimulus" measure of the new Obama administration, according to CCH, a Wolters Kluwer business (http://www.cchgroup.com/). The agreement is expected to pass both houses of Congress without further changes this week and be signed into law by the president.

To read the CCH Special Tax Briefing on the significant tax provisions of the Act, go to http://tax.cchgroup.com/legislation/.

"While spending is the largest component of the stimulus plan, this is also a major tax bill," said Mark Luscombe, JD, LLM, CPA, and CCH principal federal tax analyst.

The tax provisions, which affect individuals, businesses, environment and government, are aimed at increasing spending, employment, education and clean energy.

Low, Modest Incomes Benefit

Low and middle-income wage earners; people receiving unemployment benefits; prospective new car and home buyers; and families or individuals with college expenses may all benefit from the changes affecting individuals. In addition, the stimulus legislation provides another temporary "patch" that will keep millions of taxpayers out of the reach of the alternative minimum tax (AMT) for another year.

The provision that will affect the greatest number of people is a "Making Work Pay" tax credit for the 2009 and 2010 tax years. The credit will be figured as 6.2 percent of taxable wages, to a maximum of $400 for single filers or $800 for joint filers. The credit begins to phase out at adjusted gross incomes of $75,000 for single filers and $150,000 for joint filers, diminishing by 2 percent of any amount above those levels. In effect, the credit decreases to zero when adjusted gross income hits $95,000 for single filers; $190,000 for joint filers.

Recipients of Social Security, Railroad Retirement and Veteran's Administration benefits will get a minimum credit of $250, even if they have little or no earned income to qualify for the credit otherwise.

"The credit is refundable, so some people will benefit from the credit, even if they don't owe income taxes," Luscombe noted.

Unlike the "stimulus rebate" credits of 2008, which were delivered in the form of a single check, the "Making Work Pay" credit will be delivered as a somewhat larger paycheck, as a reduction in quarterly estimated tax payments or as part of a tax refund.

"The idea seems to be that if people get the credit through their paychecks, the money is more likely to get into circulation, rather than stuck into a savings account or used to pay down debt," Luscombe said. "Changing people's withholding can be difficult to do automatically, however. It will be interesting to see how it's managed."

Yet Another AMT Patch

The stimulus bill contains another temporary AMT patch to the tax code that will keep millions of taxpayers from having to pay the vexsome alternative levy. For 2009 returns, it sets the AMT exemption at $46,700 for single filers, $70,950 for joint filers. Absent the patch, these amounts were set to revert to just $33,750 for individuals and $45,000 for married couples filing jointly.

"Congress has been applying a one-year patch every year for several years now, usually late in the year," Luscombe noted. "This expected bit of tax help probably won't have a very stimulative effect, but it will lessen uncertainty and help people plan their tax moves earlier in the year."

Expanded Credit for Educational Expenses

Many people paying for college expenses will benefit from a multi- dimensional expansion of the Hope Credit for post-secondary education.

Renamed the "American Opportunity Tax Credit" for the 2009 and 2010 tax years in which it will be available, the maximum credit amount will be $2,500 versus $1,800 under current law. It's figured as 100 percent of eligible expenses to $2,000 plus 25 percent of expenses above $2,000, so someone with total eligible expenses of $4,000 or more would reach the maximum amount.

Unlike the existing Hope Credit, which covers expenses during only the first two years of post-secondary education, the American Opportunity Credit can be used for expenses incurred in up to four years of study. In effect, it will also largely replace the existing Lifetime Learning Credit for college expenses over the next two years.

In addition, the legislation expands the kinds of expenses eligible in figuring the credit to include "course materials."

"Up until now, you haven't been able to include cost of textbooks in computing the credit, yet that cost can be substantial," Luscombe noted. "Some students attending community colleges with modest tuition costs might see a significant increase in the amount of credit they can claim."

The credit can also now be claimed by some people whose incomes made them ineligible to take full advantage of the Hope Credit. It phases out with modified adjusted gross incomes between $80,000 and $90,000 for single filers, or $160,000 and $180,000 for joint returns, as opposed to previous phaseout ranges of $50,000 to $60,000 and $100,000 to $120,000.

Finally, 40 percent of the credit will be refundable, so even if a family owes no income tax due to other credits and deductions, it can receive a check for a portion of the American Opportunity Credit. However, a child cannot claim the credit unless he or she provides more than half his own support.

"These changes provide some help to families struggling with college costs in hard times and may allow some students to stay in school who would otherwise drop out," Luscombe said. "But although a more educated workforce is probably a public benefit in the long run, it's hard to see this providing a lot of economic stimulus right away."

In another education-related tax benefit, the new measure will allow withdrawals from 529 savings accounts to pay for computers, computer-related technology and Internet access for beneficiaries.

"Colleges and universities typically require students to have laptops, so this is an appropriate expansion of permitted withdrawals from qualified tuition savings programs," Luscombe said.

Help with Earned Income, Child Credits

The stimulus measure will benefit people at the lower end of the income scale in a number of ways. Married couples with children entitled to the Earned Income Tax Credit, or EITC, can benefit from a provision that raises the "phaseout" range of the credit, so they retain more of the credit as their incomes increase. Taxpayers with three or more children also see an increase.

Low-income families also benefit from a liberalization of the refundable portion of the $1,000-per-head Child Credit. The new provision takes income above $3,000, rather than $8,500, into account in figuring how much of the credit can be refunded, even if the taxpayer owes no other tax. This expands the number of people who can take full advantage of the refundable credit.

"If these changes are figured into withholding, taxpayers will have a few extra dollars in every paycheck, which they presumably will spend," Luscombe observed.

New Rules for First-time Homebuyer Credit

The plan modifies the first-time homebuyer credit that was signed into law last year by increasing the maximum credit amount to $8,000 and by removing a requirement that the credit be repaid over 15 years, but the waiver applies only to houses purchased in 2009. The credit is also extended until December 1, 2009. However, those who take the credit will have to repay the entire amount if they sell their homes within three years of purchase.

Under current law, those who purchased homes between April 9 and December 31 of 2008 can claim the credit on their 2008 return, but must repay it over 15 years, beginning with their tax return two years after purchase. If they sell the home, they must repay the entire credit, but only up to the amount of their gain on the sale.

Stimulus for New Car Sales

To stimulate new car sales, the Act provides a deduction from gross income for sales tax attributable to the first $49,500 of the purchase price of a new car, motorcycle, light truck or mobile home. The purchase must take place in this year, on or after the date when President Obama signs the legislation. Taxpayers can take the deduction even if they don't itemize -- but they can't take this deduction and also take an itemized deduction for state and local sales tax. The deduction begins to phase out when modified AGI reaches $125,000 for single filers and $250,000 for joint filers, phasing out completely at $135,000 and $260,000 respectively.

People who take mass transit or belong to van pools may also see an increased benefit, since the stimulus increases the current exclusion amount for those benefits from $120 to $250 per month, starting in March 2009, effectively creating parity with employer-provided parking benefits.

Tax Help for the Unemployed

Unemployed workers will benefit from an exclusion of the first $2,400 of unemployment benefits from the reach of the federal income tax for 2009.

"People are often surprised to find that unemployment compensation is considered the same as taxable wages," Luscombe said. "This doesn't completely change the system, but provides some relief from a rule that seems to kick people while they're down."

The stimulus measure also lessens the cost for people who lost their jobs on or after September 1, 2008 and up until December 31, 2009 who want to continue their group health coverage. It uses credits against payroll tax to reimburse employers for subsidizing 65 percent of the premium for COBRA continuing coverage for up to nine months.

Benefits for Businesses

Small businesses experiencing losses in tax years beginning or ending in 2008 can benefit from a provision that allows them to apply the loss to previous years' income for as many as five years before the year in which the loss takes place, potentially producing a tax refund for the prior year. Normally, losses can be "carried back" only to the two previous years. "Small" businesses, for this purpose, are those with gross receipts of less than $15 million.

"This can put cash back into a business quickly, and may keep a struggling business from closing its doors," Luscombe said. "It's not so clear that it will actually increase economic activity."

The legislation also extends two provisions that encourage businesses to invest in equipment. Bonus depreciation, which allows a business to write off an additional 50 percent of the cost of new equipment in the first year, will be extended from 2008 to 2009. Enhanced small business expensing, which allows businesses to totally write off up to $250,000 in new equipment subject to a phaseout when capital expenditures exceed $800,000, will also be extended from 2008 to 2009.

"Many people are doubtful that these provisions actually produce any more spending on equipment than would otherwise take place," Luscombe noted. "They argue that businesses don't buy equipment just to get a tax break; they buy it because they believe they can increase sales and profits. It also won't help businesses that are strapped for cash and unable to borrow. Still, not extending these breaks would probably have sent the wrong signal."

To encourage purchase of certain small business stock, the law increases the exemption for gain on the stock held for five years or more from 50 percent to 75 percent for stock acquired after the date of enactment and before January 1, 2011.

For S corporation conversions, the law temporarily shortens, from 10 to 7 years, the holding period for assets subject to the built-in gains tax imposed after a C corporation elects to become an S corporation. This reduction would apply to C corporations that convert to S corporations in tax years beginning in 2009 and 2010.

"Sometimes, converting to an S corporation is the best way for a C corporation to cope with economic difficulties, and this gives them a little bit more leeway to do that," Luscombe said.

The Act also allows corporations to defer recognition of "income" that is attributed to them when a creditor cancels or reduces their debt temporarily, extends a temporary provision that allows businesses to take a larger portion of AMT or research and development credits in lieu of bonus depreciation and reduces required estimated tax payments for 2009.

Credits for Business to Do Good

The law expands the existing Work Opportunity Tax Credit, which generally gives businesses up to $2,400 to add people in targeted groups to their payrolls. It adds unemployed veterans discharged in 2008, 2009 or 2010 and "disconnected youth" -- those between 16 and 25 who haven't been regularly employed or in school for the last six months to the list of "targeted groups."

"This may induce employers to take on some people they see as 'high risk,' or who need more training than usual," Luscombe said. "But, once again, businesses would probably have to see a genuine need for a larger workforce, not just the opportunity for a tax break, to increase hiring."

A new investment tax credit is now available for investments in broadband technology in underserved rural areas and the use of tax exempt industrial development bonds is expanded to cover facilities used in creating intangible, as well as tangible, property.

"The aim of the credits is to encourage businesses to serve the public good by subsidizing their investments in people, economic development and needed technology," Luscombe said.

Credits to Create "Green Jobs"

The stimulus contains a number of energy-related tax provisions. Among them is removal of dollar limitations on credits for certain small wind property, solar water heating and geothermal heat pumps credits. The cap on solar electricity property had already been removed in 2008 legislation. All would be eligible for an uncapped 30-percent credit. The legislation extends the tax credits for improvements to energy-efficient existing homes through 2010 and increases the credit from 10 to 30 percent. It eliminates item-by- item dollar caps and instead provides an overall $1,500 cap. It also extends a credit for electricity produced from renewable sources, such as biomass, solar and wind -- through 2012 for wind power and 2013 for other types.

A new investment tax credit is provided for "advanced energy" property, including technology for producing renewable energy, energy storage and conservation, efficient transmission and distribution of electricity and carbon capture and sequestration. Projects must be certified by the Secretary of Treasury in consultation with the Secretary of Energy.

"What's being aimed at here is partly pumping money into the economy directly through the credits, but also creating new 'green jobs' that will put people to work and installing energy-efficient systems that will save money in the long run," Luscombe noted.

Plug-in vehicles get an extra boost under the stimulus, as well. The number of four-wheel vehicles that can qualify for the existing credit is doubled, and a low-speed credit is introduced for vehicles sold after December 31, 2009, with a maximum credit of $4,000.

Tax Incentives for State, Local, Tribal Projects

State and local governments will benefit through a wide variety of measures that should make their bonds easier to sell, including exempting "private activity bonds" from the alternative minimum tax. Local governments can also issue "recovery zone" bonds to finance projects in areas experiencing "significant poverty, unemployment or home foreclosures," and Indian tribal governments are given an expanded ability to issue bonds to finance economic development.

"These tax provisions may spur some development at a relatively low cost to the federal treasury, but a greater part of the president's recovery plan relies on direct grants to the states for 'shovel-ready' projects," Luscombe said.

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