House Approves Tax Extenders And Energy Bill

by Mike Godfrey, Tax-News.com, Washington

22 May 2008

The US House of Representatives on Wednesday approved legislation extending key tax breaks for individuals and business, while providing tax incentives for the production of renewable energy.

The legislation, known as the Renewable Energy and Job Creation Act of 2008 (H.R. 6049), cleared the House by a strong bipartisan vote of 263-160, and makes provision for approximately USD18bn of tax incentives for investment in renewable energy, carbon capture and sequestration demonstration projects, energy efficiency and conservation.

The bill, introduced by House Ways and Means Committee Chairman Charles Rangel (D-NY), also extends USD27bn of expiring temporary tax provisions, including the research and development credit, special rules for active financing income, the state and local sales tax deduction, the deduction for out-of-pocket expenses for teachers, and the deduction for qualified tuition expenses.

In addition, the bill provides almost USD10bn of additional tax relief for individuals through an expansion of the refundable child tax credit, and a new standard deduction for property taxes.

The bill would be primarily offset by closing a tax loophole that allows individuals that work for certain offshore corporations, such as hedge fund managers, to defer tax on their compensation, and would delay the effective date of a tax benefit that has not yet taken effect for multinational corporations operating overseas.

“We now have an opportunity to reverse the trend of dangerous addiction to foreign oil and the lack of political will to do something to beat that addiction," commented Rangel on the House floor.

Rangel went on to remark in his floor statement that:

"Under the leadership of Speaker Pelosi, we have taken the initiative to pass legislation that will enhance our ability to promote our energy independence through the use of renewable sources and create green-collar jobs for American workers."

“The possibilities of this legislation are virtually endless when you think of the variety of sources we can use to produce renewable energy. This bill presents a great opportunity to explore new areas and develop new technologies."

“This legislation will also extend vital tax relief to American families and businesses whose tax bill would increase at the end of the year if we did not act."

"Tax relief provided in this bill include the research and development credit to help American businesses remain competitive, as well as deductions for State and local sales tax, real property tax for non-itemizers, tuition expenses, and out-of-pocket expenses for teachers."

"This bill would also expand the refundable child tax credit to help more than 13 million children and their families. Especially during tough economic times, there are millions of families who rely on these deductions for their economic security and this bill delivers the tax relief they deserve.”

The legislation now goes on to the Senate, but strong opposition to the offset provisions from some Senate Republicans means that the bill faces an uncertain future. In any event, President Bush has threatened to veto the legislation if it reaches his desk in its current form.

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