Stimulus plan roundup
The American Recovery and Reinvestment Act runs 1,041 pages and includes $787 billion in provisions designed to offer a much-needed stimulus to the economy. As retailers, distributors, manufacturers and lumberyards continue to analyze its impact, here is a breakdown of what several key industry groups lobbied for, and what they ultimately received.
The National Retail Federation is a trade organization that represents all retail formats and channels, including department, specialty, discount, supermarket, drug, chain and independent stores.
What it wanted:
The Net Operating Loss Carryback provision: When a business’s deductions exceeds its gross income, the “net operating loss” can be carried back to offset previous profits for as long as five years. As originally written, the provision would have yielded savings of $15 billion to $20 billion, with approximately one-fourth of it going to struggling retailers, according to the NRF.
National sales tax holidays. A series of “no sales tax” periods, each lasting 10 days, during March, July and October of 2009, to stimulate consumer spending. The federal government would reimburse states for lost tax revenues.
No extension of COBRA benefits. The NRF opposed a provision that allowed workers 55 years or older who had been with a company for 10 years COBRA benefits until they were old enough for Medicare.
What it got:
A last-minute change to the Senate and House approved bill limited the carryback provision to companies with gross receipts of $15 million or less, benefiting only the smallest retailers, the NRF said.
No sales tax holidays were declared.
The COBRA provision was removed from the stimulus bill.
What it said:
“Retailers were extremely disappointed by lawmakers’ decision to severely reduce the [carryback] provision,” said Craig Shearman, a NRF spokesman. “After being approved by both the House and the Senate, it’s almost unprecedented to see a provision evaporate the way this one did.”
The American Hardware Manufacturers Association is a Schaumburg, Ill.-based trade association of manufacturers and suppliers in the hardware, home improvement, lawn and garden, paint, decorating and building products industries.
What it wanted:
More generous home buyers’ credit. The AHMA supported the $15,000 first-time home buyer’s tax credit originally proposed by the Senate. The final version signed by President Obama offers an $8,000 tax credit for first-time home buyers.
What it got:
The final version signed by President Obama offers an $8,000 tax credit for first-time home buyers.
The Net Operating Loss Carryback provision. Small businesses (under $15 million in annual gross receipts) can increase, from two to as many as five years, the period under which they offset their losses.
Direct expensing. The bill allows a temporary increase in the amount that can be deducted the first year when businesses buy machinery. In addition to the $250,000 deduction, businesses are allowed to take an extra 50 percent bonus depreciation in the first year. This provision expires at the end of 2009.
The “Making Work Pay” tax credit—$400 for individual taxpayers and $800 for married couples—that puts more money into consumers’ pockets. Also, a temporary increase in the income levels that would trigger the Alternative Minimum Tax, another measure to boost consumer confidence
What it said:
“Our members also tell us it is important that banks start lending again,” said Timothy Farrell, the AHMA’s president and CEO. “For many in our industry, lines of credit are very important. Hopefully, Washington will take steps to restore confidence to the banking system, too.”
The National Lumber and Building Material Dealers Association represents more than 6,000 members who operate single and multiple lumberyards and component plants.
What it wanted:
More generous home buyers’ tax credit: The NLBMDA wanted a $15,000 tax credit for anyone who purchased a principal residence, not just first-time home buyers, who ultimately got an $8,000 credit.
Net operating loss carryback provision without size exclusions. Lumberyards that exceed $15 million in gross receipts a taxable year cannot offset their losses against previous gains.
Bargain mortgages. This amendment to the stimulus bill, voted down by the Senate, would have offered mortgage rates of 4 percent to 4.5 percent to credit-worthy homeowners to refinance their houses or buy new ones.
What it got:
Direct expensing and bonus depreciation. Forklifts, boom trucks, truss plant saws and other machinery can be written off as capital investments under IRS Code section 179, but only in small amounts. The stimulus bill extended that amount to a maximum of $250,000 until the end of 2009. Equipment placed into service after Dec. 31, 2007, but before Jan. 1, 2009, is also eligible for a first-year deprecation “bonus.”
Energy-efficient tax credits for building envelopes. The maximum tax credit for homeowners making energy-efficient improvements was raised from 10 percent to 30 percent for qualified purchases through 2010. Product categories include exterior windows, doors, skylights, metal or “cool” roofs and insulation. Energy-efficient boilers, furnaces and wood pellet stoves are also eligible. The stimulus bill increased the per-home cap from $500 to $1,500.
What it said:
“The nation needs an effective plan to address housing to initiate an economic recovery,” the NLBMDA said in an official statement. “Each month that goes by without one will only lead to more job losses, more business closing and more homes heading into foreclosure.”
The National Association of the Remodeling Industry is a Des Plaines, Ill., trade association dedicated to the remodeling industry, with more than 7,700 member companies nationwide.
What it wanted:
An extension of the Department of Energy’s Weatherization program, which helps low-income families reduce their energy bills by caulking, sealing and insulating their homes.
What it got:
The stimulus bill contains $5 billion in funding for the 30-year-old program. President Obama hopes the cash infusion will create thousands of new jobs, winterize up to one million homes and help make the country more energy independent.
What it said:
“With the aging of the U.S. housing stock, the need for greater energy efficiency and the need for lower energy costs, NARI believed this would be a critical component of the package,” said Mary Busey Harris, executive vp of NARI. “[We] made that position known to the new administration as well as to Senator Dianne Feinstein.”
The National Association of Home Builders, based in Washington, D.C., represents more than 200,000 members involved in home building, remodeling, multi-family and commercial construction, subcontracting and other building-related trades.
What it wanted:
More generous home buyers’ credit. The NAHB pushed hard for a $15,000 tax credit available to all purchasers of a principal residence.
What it got:
Net Opera ting Loss Carryback provision.
Direct Expensing and Bonus Depreciation.
$2.5 billion in gap financing for the Low Income Housing Tax Credit (LIHTC) program.
Neighborhood stabilization: $2 billion to purchase and rehabilitate foreclosed and vacant properties to promote affordable housing.
What it said:
“Learn how you can take advantage of [the] $8,000 tax credit to buy the home of your dreams,” reads the NAHB’s new Web site for first-time home buyers.