Daily Tax Update - July 17, 2009

WAYS AND MEANS APPROVES HEALTH CARE TAX PROVISIONS:  Early this morning, after more than a 15-hour mark up, the House Ways and Means Committee voted 23-18 to approve health care reform legislation (H.R. 3200) that includes a $540 billion surtax on high-income households. In addition to the surtax provision, the bill includes a delay in the implementation of worldwide allocation of interest, a limit in treaty benefits for certain deductible payments, and codification of the economic substance doctrine.

  • Three Committee members of the Democratic Blue Dog Coalition voted against the bill: Reps. Ron Kind (WI), Earl Pomeroy (ND), and John Tanner (TN) as well as all of the Republicans.
  • The Committee passed a provision to delete a provision from the Chairman’s mark that would have allowed individuals to sue insurance companies on behalf of Medicare to enforce the secondary payer statute. The Committee also adopted a provision that would exclude over-the-counter medicines from eligibility for reimbursement from health reimbursement agreements, health flexible spending accounts, health savings accounts, and Archer medical savings accounts.
  • Meanwhile, Senate Finance Chairman Max Baucus suggested yesterday that an agreement could come together in the Committee next week. Baucus said, “I have the deepest respect for the President.  I also want to make sure the product we come up with is good, is solid, is thought through. In addition, I fully believe it must be bipartisan.  It must be bipartisan to get 60 votes.” Baucus added, “My job is to do what’s right. I think we’re all progressing on a path which will produce a very good result, which will more likely mean that we’re going to get a very solid health care reform bill passed, and on the president’s desk, this year.”
  • Yesterday, Douglas Elmendorf, head of the Congressional Budget Office, told Senate lawmakers that the legislation does not include the “fundamental changes” necessary to rein in federal health spending. If anything, he said, the legislation would increase costs. 
  • Finance ranking member Charles Grassley added, “I want to make very clear that we’re working in an environment where other committees have not tried to accomplish what we’re trying to accomplish from the standpoint of Elmendorf’s statement today that none of the other plans out there bend the cost curve down. We’re working in that direction, and we feel that a bipartisan approach is the only one that will accomplish that.”

H.R.3235: To amend the Internal Revenue Code of 1986 to allow a credit against income tax for the use of ethanol in tetra ethyl ortho silicate (TEOS) production.
Sponsor: Rep Schauer, Mark H. [MI-7] (introduced 7/16/2009)      Cosponsors (None)

S.1461: A bill to amend the Internal Revenue Code of 1986 to treat trees and vines producing fruit, nuts, or other crops as placed in service in the year in which it is planted for purposes of special allowance for depreciation.
Sponsor: Sen Boxer, Barbara [CA] (introduced 7/16/2009)      Cosponsors (4)

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