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Congressman Capuano's
An update from the office of U.S. Representative Michael E. Capuano
7th Congressional District of Massachusetts

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December 18, 2015

Tax Extenders

Yesterday the House considered a Motion to Concur in the Senate Amendment to H.R. 2029 with House Amendment #2 – the Tax Increase Prevention and Real Estate Investment Act. This tax extenders package makes 22 tax provisions permanent. Most of them expired at the end of 2014. I did have some concerns about this tax package. However, several key provisions aimed at working families were made permanent. They are the Earned Income Tax Credit, the American Opportunity Tax Credit and the Child Tax Credit. It is estimated that 24 million families will benefit from these tax credits. The research and development tax credit is also made permanent, which will create jobs and help encourage additional investment in research. This is particularly important in Massachusetts with our heavy concentration of universities, hospitals and research facilities. Making this tax credit permanent gives businesses some degree of certainty in planning research projects that often require time to prepare facilities and conduct research.

As with all bills, there are provisions I support and others I have questions or concerns about. I always have to balance the positive and the negative aspects of all legislation in determining how I will vote. In this legislation, my biggest concern was over supporting any tax reductions until more progress is made on our deficit. However, most of this bill favors long-term Democratic principles – such as the earned income tax credit (EITC), new market tax credit, Research & Development tax credits and the Child Tax Credit. As you will see from the table below, most of the benefits of this tax extenders packages flow to policies I have long supported — either for economic reasons (EITC) or regional ones (R&D). Even many of the provisions I do not strongly support are still acceptable to me.

One important consideration for me was by making some of these tax credits permanent, such as the Earned Income Tax Credit and the Research & Development tax credit, they won’t be available as bargaining chips in future negotiations.

Duration of the Extension Item 10-Year "cost"
(in Billions)
The provisions I strongly support
Permanent Research and experimentation tax credit $113 Massachusetts (and especially the 7th District) is the largest beneficiary of this tax incentive
Permanent Lower refundability threshold for the Child Tax Credit so low-income families can get a larger refundable credit $88 Helps the poorest children in America
Permanent Extend American Opportunity Tax Credit for undergraduate tuition $80 Helps students and higher education institutions
Permanent Expand the Earned Income Tax Credit to remove the marriage penalty and provide a larger credit for families with three children $30 Helps the poorest American families
Permanent Allow seniors to make tax-free charitable donations from Individual Retirement Accounts (IRAs) $9 Helps seniors and charities
Permanent Other provisions made permanent such as deductions for certain expenses of elementary teachers, exclusion for employer provided mass transit and parking benefits, charitable deduction for contribution of food inventory $8 Helps elementary school teachers and children
Extended for 5 Yrs Work Opportunity Tax Credit - for wages paid to targeted groups such as food stamp recipients, SSI recipients, and long-term unemployed. $9 Helps our most challenged Americans looking for work
Extended for 5 Yrs New Markets Tax Credit - for investment in low-income neighborhoods $3 Helps our poorest neighborhoods
Extended for 5 Yrs Renewable energy credits and other energy provisions $26 Helps our environment
Extended for 2 Yrs Delay the "Cadillac Tax" on high-value employer-provided health plans for two Yrs, from 2018 to 2020 $16 Helps our unionized workers
Extended for 2 Yrs Pause the medical device tax for 2016 and 2017 $4 Massachusetts is home to many medical device manufacturer with many employees
The provisions I can live with
Permanent Increased levels of small business expensing (Section 179) $77
Permanent Allow taxpayers to deduct sales taxes in lieu of state & local income taxes $42
Permanent Active Financing Exception allowing multinational financial companies to defer tax $78
Permanent Special 15-year depreciation schedule for restaurant and retail buildings $20
Permanent Other provisions made permanent $18
Extended for 5 Yrs Extend 50% Bonus Depreciation, reducing it to 30% by 2019 $28
Extended for 5 Yrs Allow multinationals to transfer money between overseas subsidiaries without paying tax $8
Extended for 2 Yrs 2-year extension of all other tax extenders (would expire at the end of 2016) $20
Extended for 2 Yrs Make Cadillac tax penalties deductible against the corporate income tax $4
Extended for 2 Yrs Pause the health insurance tax for 2017 $12
Extended for 2 Yrs Program integrity for refundable credits and other provisions -$7
TOTAL "cost" (in billions) $686
Total "cost" of provisions I strongly support (in billions) $386 56%

Of New England’s 21 member House delegation, 17 voted YES, 3 voted NO and one member was not present. I think this underscores the importance of the tax extenders bill to the region. It has broad support from a range of advocacy groups, such as Bread for the World and Nuns on the Bus. The Senate passed the bill this afternoon and President Obama has stated he will sign it.

I voted YES. The tax extenders package passed and the entire vote is recorded below:





















Omnibus Legislation

Today the House considered a Motion to Concur in the Senate Amendment to H.R. 2029 with House Amendment #1 – Consolidated Appropriations Act of 2016. This legislation provides $1.1 trillion in funding for the federal government through September 30, 2016. Of that, more than $57 billion will support transportation and housing initiatives. This includes the first installment of New Starts money for the Green Line Extension. The legislation reauthorizes the Land and Water Conservation Fund (LWCF) for three years, establishes an ocean communities research and development grant fund and increase funding for the LWCF by $144 million. It also increases the budget for NASA, while funding important program priorities for Massachusetts.

The omnibus increases funding for National Institutes of Health (NIH) research by $2 billion which is a significant increase over previous years. With Massachusetts’ high concentration of teaching hospitals, laboratories and research facilities, this additional money will have a measurable impact on our local economy. The omnibus fully funds the President’s request of $819 million for cybersecurity initiatives, including efforts to secure civilian networks and prevent cyberattacks. It also increases the maximum Pell Grant award for the next academic year.

I did have concerns about some of the provisions in this omnibus bill. However, as with the tax extenders legislation, I had to balance the positive aspects with the negative. I don’t support a provision that prohibits the Securities and Exchange Commission (SEC) from using funds to implement regulations on disclosure of corporate political contributions. I was concerned about inclusion of the Cybersecurity Act of 2015 because that legislation specifically focuses more on increasing the government’s access to personal information rather than on ways to secure our networks. This is separate from the Administration’s efforts, which the omnibus fully funds, related to preventing cyberattacks. I also do not support the end of the ban on oil exports, which was included. In the final analysis, however, the positive aspects of this bill far outweighed the negative. The Senate passed the bill this afternoon, in a single package combining the tax extenders and Consolidated Appropriations Act of 2016, and President Obama has stated he will sign it. I voted YES. You can view a more detailed summary prepared by the Ranking Member on the Appropriations Committee here. The legislation passed and the entire vote is recorded below:





















What’s Up Next

The House has adjourned for the year. Next votes are expected on Tuesday January 5th.


Congressman Mike Capuano
7th District, Massachusetts
Committee on Ethics
Committee on Transportation and Infrastructure
Committee on Financial Services

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