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December 21, 2015

Bipartisan Group Of Lawmakers Supports MSCI-Backed Provisions That Will Create 440,000 Jobs, Save Employee Health Care Benefits

Before departing for their holiday break, last Thursday and Friday federal lawmakers passed a fiscal year 2016 omnibus spending bill and a major tax bill that included several provisions supported by the Metals Service Center Institute. 

Combined, the tax and spending legislation funds the federal government through fiscal year 2016, suspends the Affordable Care Act employee benefits and medical device taxes for two years, permanently extends several business tax provisions and repeals the United States’ 40-year-old ban on oil exports. The House passed the tax bill on a 318 to 109 vote on Thursday and passed the spending bill on a 316 to 113 vote on Friday. The Senate combined the two measures and passed them on a 65 to 33 vote on Friday. (Click the links to see how your representatives and senators voted.) 

MSCI released a statement on Friday after the Senate vote. President and CEO Bob Weidner said, “MSCI strongly supported the tax measures in the PATH Act and the export ban repeal. Making permanent provisions like the R&D tax credit and section 179 expensing will provide certainty to U.S. job creators while the employee benefits tax suspension will prevent employers from being forced to cut back on employee health benefits, including health insurance and wellness programs.” Weidner also called the tax suspensions “a good start,” but pledged that MSCI will continue to support full repeal of the employee benefits and medical device taxes. 

MSCI worked with its partners at the Energy Equipment and Infrastructure Alliance (EEIA) to secure repeal of the export ban. EEIA estimates ending the ban will create nearly 440,000 jobs and add $64 billion to GDP in just three years. Lifting the ban also will allow U.S. producers to generate more than one million barrels a day and, according to the Government Accountability Office, could cut consumer gas prices by as much as 13 cents per gallon. A Wall Street Journal news story touted the effort to end the export ban as a “blueprint for bipartisan compromise.” (Wall Street Journal subscribers can read that full article, which outlines the negotiations surrounding the successful effort to repeal the ban, here.) USA Today also supported ending the export ban. 

Meanwhile the Tax Foundation provides an overview of some of the most important business tax provisions in the tax bill. They include:

  • Expansion And Permanency For Section 179 Expensing. This provision, which allows small businesses to immediately deduct up to $500,000 of investments and indexes that deduction to inflation, will reduce taxes by $77.1 billion.
  • Extension Of Bonus Depreciation Until 2019. This provision, which allows all businesses to immediately deduct 50 percent of some investment costs, will reduce taxes by $28.3 billion.
  • Permanent Research And Development Tax Credit. This provision, which allows businesses that engage in certain research activities to write off those investments, will reduce taxes by $113.2 billion.
  • Permanent Active Financing Exception. This provision, which allows corporations to defer taxes on some income earned by their foreign subsidiaries, will reduce taxes by $78 billion.
  • Two-Year Delay Of Employee Benefits Tax. This tax, which was enacted as part of the 2010 health care reform bill, would apply to high-end employer-provided health insurance plans. Delaying it will reduce taxes by $15.9 billion.
  • Two-Year Delay Of The Medical Device Tax. This tax, which also was enacted as part of the 2010 health care reform bill, puts in place a new 2.3 percent excise tax on medical devices. Delaying it will reduce taxes by $3.9 billion.

For S-Corporations, the bill makes permanent the five-year recognition period for built-in gains and the basis adjustment that allows S-Corporation owners to receive full deductions on charitable contributions. The House Ways and Means Committee provides a full explanation of all the tax provisions in the bill at this link