WASHINGTON–Millions of taxpayers, thousands of businesses and groups as diverse as solar power developers and natural disaster victims will see tax relief with the House vote Friday to approve and send to the president a $700 billion financial rescu
WASHINGTON–Millions of taxpayers, thousands of businesses and groups as diverse as solar power developers and natural disaster victims will see tax relief with the House vote Friday to approve and send to the president a $700 billion financial rescue plan.
The tax relief package attached to the rescue bill promotes renewable energy development and extends dozens of tax breaks from the critical research and development tax credit to breaks for such narrowly focused groups as motor sports racetrack owners, film producers and bicycle commuters.
The renewable energy part of the package alone, House Speaker Nancy Pelosi said, will “create and save half-a-million good-paying jobs in America immediately.”
Virtually all of the tax breaks already exist. But many of them expired Jan. 1 for use in the current tax year, and the others would have expired three months from now.
The largest group of beneficiaries in the tax portion of the financial rescue bill is about 20 million mainly upper-middle income taxpayers. Thousands of businesses had been waiting for renewal of the research and development tax credit, which expired at the end of last year. Without that credit, industry advocates say, high tech, biotech and aerospace companies would have trouble hiring the highly skilled workers needed to compete with foreign competitors.
The renewable energy incentives include an eight-year extension of investment credits for solar energy, as well as breaks for wind, geothermal and other alternative sources. The solar industry says extension of the credits through 2016 would produce an extra 440,000 jobs and more than $230 billion in investments.
The measure also has $8 billion in tax breaks for disaster victims, $5 billion for higher education tuition deductions and $400 million in deductions for teachers who buy school supplies with their own money. There are $3 billion in deductions for residents of states without income taxes that have state and local sales taxes.
There are also some four dozen small provisions. Among them, with projected costs over 10 years:
- Extending an expired provision that gives Puerto Rico and the Virgin Islands a rebate against excise taxes charged on imported rum. The rebate, at $13.50 per proof gallon, helps finance local infrastructure projects. The cost is $192 million.
- Establishing a new tax credit ranging from $2,500 to $7,500 for purchasers of plug-in electric drive vehicles. The cost is $758 million.
- Extending tax credits that expired at the end of 2007 for certain domestic corporations involved in American Samoa economic development. The cost is $33 million.
- Extending a credit of up to $10,000 for the training of mine rescue team members. The credit expires at the end of this year, and the one-year extension costs $4 million.
- Enacting President Bush’s proposal to erase the debt of the black lung disability trust fund at a cost of $1.3 billion.
- Extending for one year a seven-year depreciation timetable that NASCAR and other motorsport racing facilities have had for some years, the same tax break that amusement parks enjoy. Without the extension, the tracks would have to depreciate the cost of their improvements over 15 years, raising their taxes by $100 million.
- Extending for five years a program that reduces import duties on some wool fabrics. The tariff relief benefits U.S. worsted wool fabric producers that use imported fibers and yarns. The cost is $148 million.
- Increasing the single-year deduction in production costs, from $15 million to $20 million, that film and TV productions may take if the costs are incurred in economically depressed areas. In an effort to keep film and TV productions in the U.S., it also allows more companies to use a domestic production deduction. The cost is $478 million.
- Allowing commercial fishermen and others hurt by the 1989 Exxon Valdez oil spill in Alaska to average out damage awards over three years rather than taking a one-year hit from the IRS. The cost is $49 million.
- Extending two programs that fund rural schools and rural communities that have been relying on declining income from logging on federal land or have low property tax bases because they are located on or next to federal lands. This is a major issue in the West. The cost is $3.3 billion.
- Exempting wooden practice arrows used by children from an excise tax of 39 cents per arrow. Oregon’s two senators and two Wisconsin representatives previously introduced legislation calling for the action, saying the tax was meant for more expensive archery arrows and is untenable for makers of toy arrows that may cost only about 30 cents apiece. The bill would affect about a half-dozen manufacturers nationwide, including one in Oregon; the Oregon senators said they didn’t seek its addition to the bailout, however. The cost is $2 million.
- Allowing employers to exempt from taxation what they spend on some fringe benefits for workers who commute to work by bicycle, for example reimbursing the cost of parking the bikes. The cost is $2 million.
Some House members and radio-TV commentators have called for eliminating several of the measures, including those affecting wooden arrows, Puerto Rican rum, racetracks and film producers. AP
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