Ways and Means Committee Chairman Sander Levin and Senate Finance Committee Chairman Max Baucus have introduced the American Jobs and Closing Tax Loopholes Act. Click here to download a 29-page summary of the Act.
According to the official press release, included in the legislation are provisions to –
• “Provide tax relief to businesses and State and local governments to help them invest and create jobs;
• Provide important tax cuts to put money back in the pockets of working families;
• Help restore the flow of credit to enable small businesses to expand and hire new workers by extending small business loan programs;
• Expand career training programs for Americans who are looking for work;
• Extend eligibility for unemployment insurance benefits, COBRA health care tax credits and other critical programs that families and communities depend on through December 31, 2010;
• Endure that seniors, military service members and Americans with disabilities continue to have access to doctors they know and trust; and
• Close tax loopholes for wealthy investment fund managers and foreign operations of multi-national companies.”
Gee – it does everything but grow hair!
The bill will extend for one year - through December 31, 2010 only – the following popular tax benefits:
• the option to deduct state and local sales tax instead of state and local income tax,
• the additional $500 or $1,000 standard deduction for real estate taxes paid,
• the “above-the-line” adjustment to income for qualified tuition and fees,
• the “above the line” adjustment to income for educator expenses, and
• the ability to make a tax-free transfer of up to $100,000 directly from an IRA to a qualified charity.
You will note, as I have highlighted above, that these items are extended for 2010 only. As fellow tax blogger Kay Bell says – “We’ll have to do this all again in seven or so months”.
When will the idiots in Washington stop this nonsense? If a tax deduction is appropriate make it permanent. It can always be repealed in the future. This annual ritual of passing an extender bill is ridiculous.
The bill would be paid for by closing a multitude of foreign loopholes, making owners of S corporations engaged in a “professional service business” pay full FICA (Social Security and Medicare) tax on all net income (they will no longer be able to take a nominal salary and avoid payroll taxes by receiving the rest of the income as pass-through dividends), and preventing “investment fund managers from paying taxes at capital gains rate on investment management services income received as carried interest in an investment fund”.
Conspicuously missing from the Act is any mention of the annual AMT patch!