Senate Passes Recession Relief Bill

AP ^ | CURT ANDERSON

[VRWC_minion]

Senate Passes $51 Billion 'Job Creation Bill'

(Last Updated: March 8, 2002 -- 12:29 p.m.)

The Senate March 8 followed the House in approving a $51 billion "job creation" package administration officials have endorsed as a reasonable compromise.

Following a brief floor debate about the pros and cons of the bill, Senate lawmakers approved the House's revamped "Job Creation and Worker Assistance Act of 2002" (H.R. 3090) on a vote of 85 to 9 early March 8. The House overwhelmingly passed the bill 417 to 3 a day earlier.

White House spokesman Ari Fleischer said March 7 President Bush would sign the legislation.

House and Senate Republicans admitted the bill -- which delivers $43 billion in corporate tax breaks this year vs. $8 billion in unemployment insurance (UI) assistance to displaced workers -- was a far cry from Bush's initial stimulus or the House's $100 billion stimulus bill which passed back in October, but said this new package was still a worthwhile endeavor. "Frankly, I think we wound up about where we should have been," Senate Minority Leader Trent Lott, R-Miss., said after the vote. "I think we wound up with the best of all worlds."

Similarly, House and Senate Democrats said they dropped their push for rebate checks and worker subsidies for health care insurance in favor of locking in the UI extension for workers left jobless after September 11 as well as a two-year fix for a bundle of popular business tax breaks that expired last December.

The compromise legislation features: a three-year, 30 percent depreciation boost for business, along with the requisite alternative minimum tax modification for the depreciation allowance ($35 billion in 2002, $16 billion through 2012); an increase in the two-year carryback for net operating losses to five years; a waiver of the 90 percent limitation against the AMT ($8 billion in 2002, $2 billion through 2012); a bundle of targeted tax breaks to spur investment in the New York areas damaged as a result of the September 11 terrorist attacks ($484 million in 2002, $5 billion through 2012); a two-year fix for most of the so-called tax extenders ($394 million in 2002, $4 billion through 2012); a five-year extension of the subpart F exception for active financing income for insurance companies operating abroad ($315 million in 2002, $9 billion through 2012); a handful of technical tax corrections ($2 billion in 2002, $3 billion through 2012); and a base 13-week extension of UI benefits that can be automatically renewed for an extra 13 weeks should states require additional resources ($9 billion in 2002, $13 billion through 2012).

The Joint Committee on Taxation estimates that the bill will cost $51 billion in 2002, approximately $94 billion from 2002 to 2007, and about $42 billion through 2012.

[babble-on]

Businesses won't buy anything they wouldn't otherwise purchase just because of accelerated depreciation. They'll buy the same stuff and just depreciate it faster. Gimmicks like this are a lousy way to steer things like employment, and someone else will have to pay the taxes that these companies aren't paying. The no-account congress just realized that the economy was taking off no thanks to them and rather than being in blame-shifting mode they suddenly swung to taking credit mode and passed an unnecessary package.

They should call this bill the Interest Rate Hike Acceleration Act of 2002.

[Wphile]

VRWC - thanks for the information.

Babble-on - let me tell you, that my business is one business that will surely take advantage of the additional depreciation allowance.

RWfromkansas - I agree Bush will and should get the credit. Frankly, however, for those who really followed the debate it looks like he had to give up more than the Dems, but no matter. I like the business tax cuts just would have liked the personal rate cuts too.

[VRWC_minion]

Businesses won't buy anything they wouldn't otherwise purchase just because of accelerated depreciation

That is not my experience with small business. Purchases are made sooner because of accelareted depreciation.

In fact the reverse effect was felt heavily when the real estate w/o's were drastically reduced from 18 years to 27.

[babble-on]

With real estate in the 80's the tax write-offs got so generous that an entire industry was created to build unneeded buildings just so people could buy partnership rights to the depreciation. That's a poor analogy to this mess, since those schedules were helping to create the distortions that led to the S&L crisis a few years later.

Current depreciation schedule allows 20% write-off in year one, this bill moves it to 30%, and the tax savings on that would be in the 25 to 35% range. It's like getting a 2% discount on your asset purchase. Is that really going to be a driver of the internal rate of return on a financed piece of capital equipment? Give me a break. But it means the government is back in deficit and my personal tax rates won't drop for a decade so GE can pay less taxes. Let's eschew corporate welfare in favor of a truly smaller government spending profile and lower taxes for all.

[rwfromkansas]

I agree.

[babble-on]

Of course you'll take advantage of it. I open my presents on Christmas morning, too.

[Wphile]

Actually they are only allowed 10% or 14% the first year, using DDB, for 5 and 7 year assets - you only get to take 1/2 in the year of purchase. They are allowed to directly expense approximately $25,000 right away - section 179. So, without having read the bill (and that's important when tax legislation is involved), it looks to be like they are doubling the depreciation allowance. This doesn't just effect the GEs of the world but all the small business owners too. I am sure the NFIB was pushing hard for this.

Frankly, I would have perferred personal tax cuts but the Dems said "no" to that, even if in place of the business tax cuts.

[VRWC_minion]

But it means the government is back in deficit and my personal tax rates won't drop for a decade so GE can pay less taxes

First, accelerating depreciation doesn't lower anyone's taxes. Second, if it only lowered corporate taxes you and I would be better off. Corporate taxes are passed on to me and you.

[VRWC_minion]

Apparently the Rats didn't want this depreciatio to pass Senate rejects depreciation bonus in economic package


By
(January 25, 2002)
WASHINGTON -- The U.S. Senate today rejected a three-year depreciation bonus as part of an economic stimulus package, but high-tech industry groups said the Republican-backed measure is needed to encourage computer and application purchases by businesses.

ADVERTISEMENT

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The proposal, offered by U.S. Sen. Gordon Smith (R-Ore.), would have offered a 30% depreciation bonus. The measure was defeated by a vote of 45 to 39.

Following the defeat, Smith immediately introduced a new amendment seeking a two-year depreciation bonus. No action was taken on that measure immediately.

The bonus would work this way: If a computer costs $1,000, the purchaser would be able to write off a bonus 30% of the cost in the first year, or $300, plus 20% (the normal depreciation spread over five years) of the remaining $700.

Although the failure of Smith's proposal is a setback, it's not the end of efforts to get a depreciation bonus approved.

Senate Majority Leader Tom Daschle (D-S.D.) this month said he would back an accelerated depreciation plan, but it would be limited to one year and would be retroactive to last September.

Supporters of the original depreciation bill are hopeful the two-year version will win passage: "I think it was an attempt to meet [the Democrats] halfway," said a spokesman for Smith.

Technology industry trade groups said they're worried that a short-term depreciation bonus will have the same impact that zero percent financing had on automobile makers.

"You get that huge jump in sales and then you fall off the cliff," said Harris Miller, president of the Information Technology Association of America in Arlington, Va. "That's why we are pushing for that longer period of time."

The Daschle depreciation proposal doesn't give companies enough time to take advantage of it, said Robert Cresanti, vice president of public policy at the Business Software Alliance. "A period of less than a year is just not a reasonable length of time for companies to plan," said Cresanti.

The U.S. House last year approved a three-year, 30% depreciation bonus.

[Wphile]

Thanks.

[teletech]

Chill

Yes, I do feel a chill. RATS do that to me don't ya know.

[teletech]

you mean to tell me Daschle wanted tax cuts?

Daschle got a bill that will do NOTHING to stimulate the economy. Daschle cares not one wit for the economic state of this country. His whole reason for drawing breath is to embarrass the President.

[Freee-dame]

How come it didn't say, millionaire Jay Rockefeller?

"Millionaire" is the alphabet news outlets name for Republicans. Its "public servant" for 'rats.

[OldFriend]

Just one more example of why Bernard Goldberg was right. BIAS is the name of the game and I'm going to keep pointing it out. They'll never get it, but we'll be silent no longer.

[Freee-dame]

silent no longer

Freepers will make sure of this.

[joeyman]

See, and the FEDGOV thinks people lack individual initiative.