By Stephen K. Cooper, Washington Staff Writer

The House Ways and Means Committee plans to consider economic stimulus legislation on January 22, 2008, that would provide an additional $550 billion in federal spending that supporters hope will create jobs and boost American productivity. The two-year stimulus plan is called the American Recovery and Reinvestment Act, which would also provide approximately $275 billion in individual and business tax relief. Democratic lawmakers want to have the legislation approved and ready for President-elect Barack Obama's signature by mid-February.

Ways and Means Committee Chairman Charles Rangel (D-N.Y.) released a summary of the proposed legislation that includes a package of tax incentives for employment, education, housing, business, state and local governments, energy, trade and health care. The outline includes expanded child and earned income tax credits, simplified education credits, and first-time homebuyer credits for housing purchased before June 30, 2009. Only taxpayers who earn under $75,000 will be eligible for a $500 withholding tax break, but no other changes were announced for individual income tax rates.

For businesses, the legislation includes provisions to provide bonus depreciation, increased small business expensing, and work opportunity tax credits. The legislation would also provide a five-year carryback of net operating losses for certain companies and repeal the alternative minimum tax limits on new private activity bonds. No changes to corporate tax rates or capital gains tax rates were included in the final version.

The legislation would also provide a one-year deferral of a 3 percent withholding tax on government contractors who have unpaid federal tax obligations. It also prospectively repeals the Treasury Section 382 ruling, which allowed banks to use the losses of companies they acquire to cut their own tax liability.

The measure also includes a package of energy tax incentives, including an extension of renewable energy production tax credits, clean renewable energy bonds, conservation bonds, and research and development tax credits.

House Minority Leader John Boehner (R-Ohio) expressed disappointment with the Democratic tax and spending priorities, saying many of the provisions were recycled ideas that have little to do with economic stimulus. He said the measure will not create jobs, and that GOP lawmakers would offer their own ideas to Obama.

Ways and Means Rep. Kevin Brady (R-Tex.) said Republican lawmakers were not involved in the negotiations to determine the contents to this particular economic stimulus bill.

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Posted January 20, 2009.