A government funding bill and pandemic relief…almost. After months of on-again, off-again haggling, Congress appears to have reached an agreement on both a $1.4 trillion spending bill to fund government through the rest of the fiscal year and a COVID-19 relief bill. The roughly $900+ billion relief package includes direct payments of $600 per person, a temporary federal unemployment boost of $300 a week through mid-March, and more funding for schools and small businesses. The measure includes an additional temporary extension of government spending to allow time for it to be signed.
Some limited state and local aid. The bill includes no broad assistance for state and local governments. But it does include targeted funding for mass transit, schools, and coronavirus vaccine distribution. It also would allow states to spend any unused CARES Act funding next year.
What about deducting business expenses funded with PPP loans? It looks like the final version allows firms to deduct those costs—with some limits—even though they already were paid for once by taxpayers. Tax experts (and Treasury Secretary Steven Mnuchin) say the idea is a classic double-dip that will mostly benefit large firms but business lobbied hard for the provision.
And other taxes? The bill expands the Earned Income Tax Credit. It also restores the full tax deduction for business meals and entertainment, permanently retains a cut in excise taxes for beer, wine and distilled spirits, and temporarily extends a collection of other tax extenders, including the New Markets and Work Opportunity tax credits, and several alternative energy-related provisions.
Speaking of government loans… Republican Rep. Frank Hill, a member of the House Committee on Oversight and Government Reform, wants to know why the Pentagon lent shipping and logistics firm YRC Worldwide $700 million under the CARES Act. The Defense Department calls the business a critical company, but Hill questions whether YRC is essential to national security. Hill says Treasury Secretary Steven Mnuchin should have blocked the loan, but Mnuchin says the Pentagon was responsible.
Michigan House passes property tax break for solar farms. The bills would impose a payment-in-lieu-of-taxes system for personal property taxes on expensive solar farm equipment ($4,000 per megawatt of generation and $500 for battery storage devices). Local governments fear the provision would lower their property tax revenue by 20 percent.
In Washington State, Gov. Jay Inslee seeks new taxes on capital gains and health insurers. The revenue would help support an increase in the state’s minimum weekly unemployment benefit from $201 to $270. The new taxes, which would take effect in 2022, include a new 9-percent capital gains levy and a monthly $3 tax on health insurers for each person they cover. In the short run, Inslee would fund government operations by pulling money from the state’s rainy day fund. The new taxes and spending plan are part of his two-year $57.6 billion budget proposal.
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