Is Recovery Package Headed Your Way?

House Democrats recently introduced the tax portion of their proposed $825 billion economic recovery package, CNN Money reports. The House Ways and Means Committee, which writes tax policy, released a 328-page bill outlining $275 billion in tax breaks. The House Appropriations Committee released a bill that covers the $550 billion spending portion.



The two bills, which make up the American Recovery and Reinvestment bill, will be reviewed and amended starting this week. The Make Work Pay Credit, which was a centerpiece of President Obama’s campaign, would be worth $500 a year for individuals and $1,000 for couples. The full credit would be available for 2009 and 2010 but is limited to those making $75,000 or less ($150,000 or less for workers filing joint returns).



The credit could be paid to workers in one of two ways: through their paychecks or through their federal tax return. The Make Work Pay Credit also would be refundable, meaning that even tax filers without any tax liability would receive a credit.



The bill contains several business tax breaks, including some, but not all of the ones that Republicans have been pushing for. Included in the bill is a temporary broadening of the “net-operating loss carryback” to five years, up from two years currently. The provision would let companies apply their 2008 and 2009 losses to past and future tax bills so they can get money back on taxes they’ve already paid or would otherwise have to pay.



For small business owners, the bill would increase the amount of expenses that can be written off for capital expenditures made in 2009 to $250,000, up from $125,000 currently.



Republicans in the House have made clear that they would prefer a recovery package that leans more heavily toward tax cuts for businesses and individuals. House Republican leader John Boehner (R-OH) has argued that the spending portion will neither create jobs nor stimulate the economy.



In addition, the bill offers a host of renewable energy tax credits worth approximately $20 billion. The spending portion of the bill included $245 million for Farm Service Agency information technology systems considered necessary to implement the 2008 Farm Bill, AgriMarketing reports. An additional $209 million was included for Agricultural Research Service facilities across the country.



Other funding items included:

• $100 million to guarantee $2 billion in loans for farming, ethanol production and other rural business activities.




• $8 billion to guarantee up to $80 billion in loans for proven renewable and transmission technologies.




• $2 billion for energy efficiency and renewable energy research, development and deployment.




• $1.5 billion to support $3.8 billion in grants and loans to help rural communities fund drinking water and wastewater treatment systems.




• $400 million for Natural Resources Conservation Service watershed improvement programs.




• $2.825 billion for rural broadband infrastructure.