First Look at House Stimulus Legislation

Update:
The House Appropriations Committee has released the legislative text of the stimulus bill.

The House Ways and Means Committee has released an outline of the tax provisions it will propose as part of the recently unveiled House economic stimulus package. Of the $825 billion in spending and taxing measures, the bill will include some $275 billion in tax cuts.

Remember, the name of the game in economic stimulus is to get money into the economy ASAP. And the name of the game for fiscal responsibility is to get money into the economy ASAP while ensuring that the deployed funds provide most economic stimulus bank-for-the-buck. With that in mind, here's a quick rundown of:

The Good

• "Making Work Pay Credit" -- but only if beneficiaries are limited to those earn under some (middle) income cap
• Expansion of the Earned Income Tax Credit (EITC)
• Increase in child tax credit, $0 floor -- that $0 floor is particularly good news, because it's currently possible to be too poor to qualify for this credit.
• A Prospective repeal Treasury Section 382 ruling -- The Section 382 ruling, AKA "The Wells Fargo Rule" was Treasury's unilateral and probably illegal alteration of the tax code for banks

The Bad

• Remove repayment requirement on $7,500 first-time home buyer credit -- artificially high housing prices were ground zero for the financial meltdown; this credit is an attempt to reinflate the housing bubble

The Ugly Â Â (Pretty much any business tax cut is a loser, but these are noteworthy)

• Bonus depreciation -- As Citizens for Tax Justice helpfully pointed out in a recent report, this tax cut drains revenue while having no impact on business investment levels
• 5-year carryback of net operating losses (excluding companies receiving TARP benefits, Fannie Mae, Freddie Mac) -- Although the TARP proviso mitigates this one, it's still just a colossal waste of revenue, because businesses are going to do what they do (hire, invest, expand, etc.) based on what they thing the next few quarters holds in store, not how much money they have in the bank.
• Expand work opportunity tax credit -- This is the "feel good" business tax cut that supposedly rewards businesses for hiring disadvantaged youths and other hard-to-employ groups (like ex-convicts). The fact is, though, is that businesses don't base their hiring decisions of this credit and so it becomes "free money" for those that do happen to hire from these groups.

The New York Times: "Democrats in House Unveil $825 Billion Stimulus Bill"

The Wall Street Journal: "Democrats to Unveil $825 Billion Stimulus Measure"

AP: "House Democrats propose $825 billion stimulus bill"

Bloomberg: "House $825 Billion Stimulus Has $275 Billion Tax Cut"

Image by Flickr user jampa used under a Creative Commons license.