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December 10, 2009

Federal Headlines

House Passes Extenders Tax Bill, FAA Excise Tax Measure

 

House lawmakers approved the Tax Extenders Bill of 2009 (HR 4213) on December 9. The 241-to-181 vote to pass the measure came after Democrats spent the day defending their decision to include $31 billion in new taxes to offset the extension of expiring tax provisions. Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., said that extending the tax provisions would boost job creation during the recession. However, Rep. Tom Price, D-Ga., speaking on behalf of the House Republican Study Committee, noted that the extensions in the bill are long-standing policy and should not be offset by revenue increases.

 

"These tax extensions, such as the research and development credit for businesses, are simply a continuation of long-standing policies," Price said. "The argument that they need to be offset with new tax hikes is just an excuse to push more taxpayer money into federal coffers." But Rangel said Democrats are simply trying to stop people from taking unfair advantage of the tax code, particularly investment managers who would face higher taxes on income from carried interest under the legislation.

FAA Extension

 

In other tax action, House lawmakers on December 8 passed the Fiscal Year 2010 Federal Aviation Administration Extension Act, Part II (HR 4217) by a voice vote. The measure would provide a three-month extension for the financing and spending authority of the Airport and Airway Trust Fund, which expires on December 31. House Transportation Committee Chairman James L. Oberstar, D-Minn., said the aviation taxes support the trust fund, which funds a substantial portion of the FAA's budget. "With an uncommitted cash balance of just $251 million at the end of FY 2009, any lapse in the aviation taxes could put the solvency of the trust fund at risk," Oberstar said. He noted that the previous long-term FAA reauthorization act, the Vision 100--Century of Aviation Reauthorization Act (P.L. 108-176) expired on September 30, 2007. The House has passed a long-term funding bill, but the Senate has not, resulting in the need for a series of short-term extension acts that, unfortunately, continues to this day, Oberstar said.

 

By Stephen K. Cooper, CCH News Staff

Ways and Means Press Release: House Passes Tax Extenders Act

Fiscal Year 2010 Federal Aviation Administration Extension Act, Part II, as Passed by the House on December 8, 2009, HR 4217

 

Senate Democrats Near Agreement on Health Reform

 

Senate Democrats said late on December 8 that they have reached agreement on a possible compromise on a public option in the health reform bill that could end the current impasse and lead to final passage of the measure. The proposal would drop an opt-in government-run plan as proposed by Senate Majority Leader Harry Reid, D-Nev., and, instead, offer an array of a health insurance policies provided by private health insurers and administered by the Office of Personnel Management (OPM), which handles benefits for federal employees. A government-run insurance program would be created in instances where private insurers fail to provide affordable choices. In order to mollify its liberal base, which strongly advocated for a public option, negotiators also proposed expanding Medicare eligibility to people aged 55 to 64.

 

Not all 10 members of the negotiating team are fully satisfied with the tentative agreement, but they agreed to allow it to move forward. Reid said he would send the proposal to the Congressional Budget Office for cost estimates, a process that could take days, before fully vetting the details with members of his caucus.

 

"I know not all 10 senators in the room agree on every single detail of this, nor will all 60 members of my caucus," said Reid. "But I know we all appreciate the hard work that these progressives and moderates have done to move this historic debate forward."

 

President Obama said the Democrats "made progress last night with a creative new framework" that he said he believes "will pave the way for final passage" of health care reform legislation. Although details of the compromise have yet to be officially released, White House Press Secretary Robert Gibbs, at a press briefing on December 9, said he thought requiring the OPM to administer the health insurance plan and requiring coverage to be akin to the Federal Employee Health Benefits Program (FEHBP) "fit together in a way that might be difficult to break apart."

 

At this point in the process, Gibbs declined to say whether the White House prefers the Senate compromise to the House version, which contains a public option. He indicated that the primary focus at the moment is to get the bill out of the Senate and into conference.

 

By Jeff Carlson and Paula Cruickshank, CCH News Staff

SFC Release: The Patient Protection and Affordable Care Act --Cutting Taxes, Making Health Care Affordable

 
 

State Headlines

Colorado --Multiple Taxes: 2010 Ballot Initiatives Would Cut Taxes

 

Colorado Secretary of State Bernie Buescher announced on December 4, 2009, that Proposed Initiatives 10 and 12 were found to be sufficient for inclusion on the November 2, 2010 general election ballot.

 
Proposition 101

 

Under Proposed Initiative 10, which will be numbered as Proposition 101, the 2011 personal income tax rate would drop from 4.65% to 4.5%, and would then decrease by 0.1% each year until reaching 3.5%, in each of the first 10 years that yearly income tax revenue net growth exceeds 6%. Beginning January 1, 2011, telephone, pager, cable, television, radio, Internet, computer, satellite, or other telecommunication service customer accounts would be exempt from state and local telecommunications taxes and fees, except for Emergency 911 fees that would be imposed at 2009 rates.

 

Motor vehicle rentals and leases would be exempt from state and local sales tax, as well as the first $10,000 of the sales price per vehicle over a period of four years. In addition, annual motor vehicle registration fees would drop to $2 for new vehicles and $1 for all other vehicles, with a maximum total charge of $10 per year per vehicle for registration, license, and title charges.

 
Amendment 60

 

Under Proposed Initiative 12, which will be numbered as Amendment 60, all districts would be required to allow petitions to lower property taxes as voter-approved revenue changes, and future property tax rate increases would expire within 10 years. These changes would be effective starting in 2011.

Proposed Initiatives 10 and 12 and Releases, Office of Colorado Secretary of State, December 4, 2009

 

Rhode Island --Personal Income Tax: 2010 Withholding Tables Available

 

The Rhode Island Department of Revenue has announced that the 2010 personal income withholding tax tables are available to calculate the appropriate withholding amounts. The annual exemption amount for 2010 is $3,650.

Rhode Island Employer's Income Tax Withholding Tables, Rhode Island Department of Revenue, December 2009

 

Washington --Multiple Taxes: Governor Announces Plans to Address Budget Shortfall

 

The 2010 supplemental budget proposed by Washington Gov. Chris Gregoire December 9 contains no tax increases. Instead, the proposal would close a $2.6 billion gap for 2009-2011 with service eliminations, reductions, or suspensions. Washington law requires the governor to submit a balanced budget. The governor indicated that she plans to introduce a second budget in January that will be accompanied by a revenue package that would eliminate tax exemptions, close "loopholes," and raise revenues. She said the second budget would restore programs slated for elimination in the "all-cuts" budget.

 

The governor's press release can be viewed in its entirety at http://www.governor.wa.gov.

Press Release, Gov. Chris Gregoire, December 9, 2009

 
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