House Republicans this week continue to avoid any action on jobs legislation, focusing instead on a purely political measure (H.R. 436, the repeal of the medical device tax) that has no chance of becoming law. Ways and Means Committee Ranking Member Sander Levin has offered a substitute to H.R. 436 that would spur job growth in part by providing hiring incentives to companies paid for by eliminating tax subsidies for Big Oil. The Senate is expected to vote on these job creation proposals - which include part of the President’s congressional to-do list - in the coming weeks and they could quickly become law but for Republican obstruction in the House. It is time for congressional Republicans to turn their focus away from rigid ideology and toward our economic recovery.
Small Business Jobs and Tax Relief Act
Summary of Amendment in the Nature of a Substitute to H.R. 436
Temporary Tax Credit for Increased Payroll. Provides a 10 percent income tax credit on new payroll-through either hiring or increased wages-added in 2012. With a maximum increase in eligible wages of $5 million per employer and the amount of the credit capped at $500,000, the benefits of this tax credit will be targeted to America's small businesses.
Extension of Allowance for Bonus Depreciation for Certain Business Assets. Extends 100 percent first-year depreciation for one year, effective for qualified property acquired and placed in service before Jan. 1, 2013 (or Jan. 1, 2014 for certain longer-lived and transportation property), and permits a business to elect to accelerate certain AMT credits in lieu of the bonus depreciation extension. (Typically, business expenditures are tax deductible in the year in which they are made, except for major purchases - such as large equipment or buildings, which must be written off over many years. One hundred percent depreciation allows businesses to write off the entire cost of major purchases in the year they are made rather than depreciate those expenses over many years.)
Denial of Section 199 Benefits for Certain Major Integrated Oil Companies. Excludes gross receipts derived from the sale, exchange or other disposition of oil, natural gas, or any primary product thereof from the domestic production deduction for large integrated oil companies.
Repeal Last-In-First-Out Accounting Rules for Major Integrated Oil Companies. Repeals the last-in-first-out (LIFO) accounting method for the Big Five integrated oil companies. (Taxpayers must account for inventories if the production, purchase, or sale of merchandise is a material income-producing factor to the taxpayer. One method of accounting for inventory-related income is the LIFO accounting method. Under the LIFO method, it is assumed that the last items entered into the inventory are the first items sold. Taxpayers with increasing inventory costs can thus use the method to claim a higher value for cost of goods sold, resulting in lower income and reduced taxes. Additionally, international accounting standards indicate a shift to phase-out the LIFO accounting method in favor of accounting methods that would more accurately reflect the value of the total inventory.)
