Daily Tax Update - July 23, 2008

HOUSE EXPECTED TO PASS HOUSING STIMULUS BILL:  Later today, the House is expected to pass the housing stimulus bill (H.R. 3221). Senate passage is expected later this week. The bill includes a $7,500 refundable tax credit for first-time homebuyers; a new standard deduction for up to $1,000 of state and local property taxes for tax year 2008; a temporary increase in the low-income housing tax credit; and a revamp of the oversight at Fannie Mae and Freddie Mac and the Federal Home Loan Bank System.

  • The revenue offsets in the bill include: requiring information returns for merchant payment card reimbursements; delaying the implementation of the worldwide interest allocation rule; and modifying the exclusion of gain on sale of a principal residence. 
  • Today, President Bush dropped his opposition to a provision in the bill that would provide grants for states and localities to buy and rehabilitate foreclosed properties. A White House spokesperson said, “We believe this is not the time for a prolonged veto fight but we are confident the President would prevail in one.” The spokesperson added, “The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets. While we have concerns with other aspects of the bill, it is important that the new authorities are put in place promptly. And so President Bush will accept Secretary (Henry) Paulson's recommendation to sign the bill.” 
  • The technical explanation of the bill can be accessed via: http://www.jct.gov/x-63-08.pdf 

REID PLANS TO OFFER TAX EXTENDERS WITH AMT PATCH NEXT WEEK: Senate Majority Leader Harry Reid is planning to offer a motion to proceed directly to a $120 billion tax bill that would patch the alternative minimum tax for 2008 and renew expiring tax breaks. The Senate has previously failed twice to obtain cloture on the House-passed extenders bill. Senate Finance Committee Chairman Max Baucus said, “I think we'll get it done.” Senate Democrats support offsetting the cost of the tax extenders. However, ranking Finance Committee member Charles Grassley said, “We're trying to find something where Republicans can be satisfied where any offsets are for new policy. It isn't that we're opposed to offsets; it's that we're opposed to offsets for existing policy.” The House passed a separate AMT patch bill earlier this year.  

SECOND STIMULUS BILL UNLIKELY UNTIL SEPTEMBER: The Senate Appropriations Committee canceled its plans today to consider a second stimulus package, thus likely ending any chances for a stimulus package to move until September. 

  • An aide to Senate Majority Leader Reid said, “After consultations with the House, it has become evident that they will not be marking up a stimulus bill until after the recess. The Senate will wait to see how the House proceeds. We remain committed to passing a stimulus bill that creates jobs and strengthens our weakening economy and will do so in September.”
  • House Majority Whip Clyburn said that he expects the second stimulus package to include funding for infrastructure, heating assistance for low-income households and proposals to stimulate the Gulf Coast economy. However, Clyburn added, “We haven't gotten around to deciding what will be in it yet.”

TAX BILL INTRODUCED JULY 22nd:
H.R.6564: To amend the Internal Revenue Code of 1986 to modify the rate of the excise tax on certain arrows designed for use by children.
Sponsor: Rep Kind, Ron [WI-3] (introduced 7/22/2008)      Cosponsors (1)

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