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Delivery of Economic Impact Payments (EIPs) [Updated June 17, 2020]
From the Document: "To mitigate the financial hardship many Americans are experiencing during the Coronavirus Disease (COVID-19) pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). A critical element of the aid package is direct payments to certain individuals in 2020. The payments are referred to as 'recovery rebates' in Section 2201 of the act, but the Internal Revenue Service (IRS) calls them 'economic impact payments' (EIPs) in the notices it shares with the general public. To qualify for a full EIP, an individual's adjusted gross income (AGI) in 2019 cannot exceed $75,000 (or $150,000 for married couples filing jointly). The payment phases out for AGIs between $75,000 and $98,000 for single filers, and between $150,000 and $198,000 for joint filers. [...] This Insight presents a brief overview of the delivery of EIPs and identifies factors that might affect the timing and accuracy of their delivery."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-06-17
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Section 199A Deduction: How it Works and Illustrative Examples [June 10, 2020]
From the Summary: "Congress made numerous changes to the federal tax code for individuals and corporate and noncorporate businesses in December 2017, as part of P.L. 115-97 (referred to in this report as the 2017 tax revision but also known as the Tax Cuts and Jobs Act). At the core of the law was a permanent cut in the corporate income tax rate from a top rate of 35% to a flat rate of 21%. During the congressional debate over the 2017 tax revision, pass-through business owners sought tax relief comparable to any reduction in corporate tax rates. Heeding this request, Congress added a new deduction under Section 199A of the federal tax code. The deduction allows pass-through business owners to deduct up to 20% of their qualified business income (QBI) in determining their personal tax liability. This reduces effective tax rates for pass-through business profits by up to 20%. Like most of the changes in the individual income tax in P.L. 115-97, the new Section 199A deduction is temporary: it is available from 2018 to 2025. In general, Section 199A allows individuals, trusts, and estates with pass-through business income to deduct up to 20% of their QBI from their taxable income."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-06-10
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Overview of the Treasury Department's Federal Payment Levy and Treasury Offset Programs [October 26, 2020]
From the Document: "The U.S. Department of the Treasury, through the Bureau of Fiscal Service (BFS), has two programs for collecting delinquent debt owed by individuals, businesses, and other entities to federal and state government agencies. They differ mainly by the type of debt each program collects. The Federal Payment Levy Program (FPLP) collects delinquent 'federal tax debt only'. In this case, the BFS collaborates with the Internal Revenue Service (IRS) to collect this debt by placing a continuous levy on eligible federal payments to delinquent taxpayers."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-10-26
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Individual Income Tax Rates and Other Key Elements of the Federal Individual Income Tax: 1988 to 2017 [February 12, 2018]
"Statutory individual income tax rates are the tax rates that apply by law to various amounts of taxable income. Statutory rates form the basis of marginal effective and average effective tax rates, which most economists believe have a greater impact on the economic behavior of companies and individuals than do statutory rates. Marginal effective rates reflect the net effect of special tax provisions on statutory rates. They differ from average effective rates, which measure someone's overall tax burden. Current statutory and effective individual tax rates are the result of the Tax Reform Act of 1986 (TRA86; P.L. 99-514) and several tax laws that have been enacted since 1986. Of particular importance among the latter are the Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508), the Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 103-66), the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16), the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUC; P.L. 111-312), and the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240). TRA86 altered the income tax rate structure. EGTRRA established what are referred to as the Bush-era tax cuts for individuals. TRUC extended those cuts for another two years, through 2012. ATRA permanently extended the Bush-era tax rates for taxpayers with taxable incomes below $400,000 for single filers and $450,000 for joint filers but reinstated the 39.6% top rate established by OBRA93 for taxpayers with taxable incomes equal to or above those amounts."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2018-02-12
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Internal Revenue Service's Enforcement Budget and Tax Compliance [January 15, 2021]
From the Document: "This Insight examines key considerations in the debate over whether the Internal Revenue Service's (IRS's) current enforcement budget is adequate to improve tax compliance--especially among high-income persons and pass-through business owners."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2021-01-15
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law and Issues for the 114th Congress [February 10, 2015]
"Expensing is the most accelerated form of depreciation for tax purposes. Section 179 of the Internal Revenue Code allows a taxpayer to expense (or deduct as a current expense rather than as a capital expense) up to $25,000 of the total cost of new and used qualified depreciable assets it buys and places in service in 2015, within certain limits. Firms unable to take advantage of this allowance may recover the cost of qualified assets over longer periods, using the appropriate depreciation schedules from Sections 167 or 168. While the Section 179 expensing allowance is not targeted at small firms, the limits on its use effectively confine its benefits to such firms. In addition, Section 168(k), which provides a so-called bonus depreciation allowance, has allowed taxpayers to expense a portion of the cost of qualified assets bought and placed in service in recent tax years. Taxpayers that could claim the allowance had the option of monetizing any unused alternative minimum tax credits left over from tax years before 2006, within certain limits, and recovering the cost of the assets that qualified for the allowance over longer periods. The allowance expired at the end of 2014. […] The Tax Increase Prevention Act of 2014 (P.L. 113-295) extended the Section 179 expensing allowance and the Section 168(k) bonus depreciation allowance from 2013 through 2014. In the 114th Congress, the House is considering a bill (H.R. 636) that would permanently set the maximum Section 179 allowance at $500,000 and the phaseout threshold at $2 million and index both amounts for inflation starting in 2016."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2015-02-10
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 112th Congress, and Economic Effects [September 10, 2012]
"Under current tax law, firms may expense (or deduct as a current rather than a capital expense) up to $125,000 of the total cost of new and used qualified assets they purchase and place in service in 2012 under Section 179 of the federal tax code. They also have the option under Section 168(k) of expensing half of the cost of qualified assets they buy and place in service the same year. Many assets qualify for both allowances. Expensing is the most accelerated form of depreciation. As a result, it has the potential to stimulate business investment by reducing the cost of capital for favored investments and increasing the cash flow of firms making such investments. This explains why economists view the two allowances as a significant investment tax subsidy. The 112th Congress has passed no legislation changing the status of either allowance, though a number of bills have been introduced that would extend one allowance or the other by one or more years, or permanently. In contrast, the 111th Congress passed four bills that enhanced the allowances, partly as a countercyclical measure: the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5); the Hiring Incentives to Restore Employment Act of 2010 (HIRE Act; P.L. 111-147); the Small Business Jobs Act of 2010 (SBJA; P.L. 111-240); and the Tax Relief, Unemployment Compensation Reauthorization, and Job Creation Act of 2010 (TRUCA; P.L. 111-312). This report examines the current status, legislative history, and main economic effects (including their efficacy as an economic stimulus tool) of the Section 179 and bonus depreciation allowances. It also identifies legislative initiatives to extend them beyond 2012."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2012-09-10
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 112th Congress, and Economic Effects [August 14, 2012]
"Expensing is the most accelerated form of depreciation for tax purposes. Section 179 of the Internal Revenue Code (IRC) allows a taxpayer to expense (or deduct as a current expense rather than a capital expense) up to $125,000 of the total cost of new and used qualified depreciable assets it buys and places in service in 2012, within certain limits. Firms unable to take advantage of the Section 179 expensing allowance may recover the cost of qualified assets over longer periods, using the appropriate depreciation schedules. While the Section 179 expensing allowance is not targeted at firms that are relatively small in employment, asset, or receipt size, the rules governing its use limit its benefits to such firms, for the most part. In addition, Section 168(k), which provides a so-called bonus depreciation allowance, generally allows taxpayers to expense half the cost of qualified assets bought and placed in service in 2012. Taxpayers that can claim the allowance have the option of monetizing any unused alternative minimum tax credits they have accumulated from tax years before 2006, within certain limits, and writing off the cost of the assets that qualify for the allowance over a longer period. This report examines the current status, legislative history, and economic effects of the two expensing allowances. It also discusses initiatives in the 112th Congress to modify them. The report will be updated as legislative activity warrants."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2012-08-14
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress, and Economic Effects [July 14, 2014]
"Under current tax law, firms may expense (or deduct as a current rather than a capital expense) up to $25,000 of the total cost of new and used qualified assets they purchase and place in service in 2014 under Section 179 of the federal tax code. But they no longer have the option under Section 168(k) of expensing any of the cost of qualified assets they buy and place in service the same year. Many of the assets that qualify for the Section 179 allowance also qualified for the Section 168(k) allowance. Expensing is the most accelerated form of depreciation. As a result, it has the potential to stimulate business investment by reducing the cost of capital for favored investments and increasing the cash flow of firms making such investments. This explains why economists view the two allowances as a significant investment tax subsidy. Under the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240), the Section 179 allowance was increased to $500,000 and the phaseout threshold to $2 million for qualified assets acquired and placed in service in 2012 and 2013. In addition, the act extended the 50% bonus depreciation allowance that was available in 2012 and 2013. Several bills have been introduced in the 113th Congress to extend and enhance the two allowances. This report examines the current status, legislative history, and main economic effects (including their efficacy as an economic stimulus tool) of the Section 179 and bonus depreciation allowances. It also identifies legislative initiatives in the 113th Congress to modify either allowance."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2014-07-14
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress, and Economic Effects [February 1, 2013]
"Expensing is the most accelerated form of depreciation for tax purposes. Section 179 of the Internal Revenue Code (IRC) allows a taxpayer to expense (or deduct as a current expense rather than a capital expense) up to $500,000 of the total cost of new and used qualified depreciable assets it buys and places in service in 2013, within certain limits. Firms unable to take advantage of this allowance may recover the cost of qualified assets over longer periods, using the appropriate depreciation schedules from Sections 167 and 168. While the Section 179 expensing allowance is not targeted at firms that are relatively small in employment, asset, or receipt size, the rules governing its use generally confine its benefits to such firms. In addition, Section 168(k), which provides a so-called bonus depreciation allowance, generally allows taxpayers to expense half the cost of qualified assets bought and placed in service in 2013. Taxpayers taking the allowance have the option of monetizing any unused alternative minimum tax credits left over from tax years before 2006, within certain limits, and writing off the cost of the assets that qualify for the allowance over longer periods. This report examines the current status, legislative history, and economic effects of the two expensing allowances. It also discusses initiatives in the 113th Congress to modify them. The report will be updated as legislative activity warrants."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2013-02-01
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress, and Economic Effects [April 9, 2014]
"Expensing is the most accelerated form of depreciation for tax purposes. Section 179 of the Internal Revenue Code (IRC) allows a taxpayer to expense (or deduct as a current expense rather than a capital expense) up to $25,000 of the total cost of new and used qualified depreciable assets it buys and places in service in 2014, within certain limits. […] Taxpayers that could claim the allowance had the option of monetizing any unused alternative minimum tax credits left over from tax years before 2006, within certain limits, and recovering the cost of the assets that qualified for the allowance over longer periods. The allowance expired at the end of 2013. On April 3, the Senate Finance Committee marked up the Expiring Provisions Improvement Reform and Efficiency Act, a bill that would extend through 2015 a variety of expired tax provisions, including the 50% bounus depreciation allowance from 2013 and the enhanced Section 179 allowance from 2010 to 2013. It is not clear if the House Ways and Means Committee will consider a comparable bill and when it might do so. In his budget request for FY2015, President Obama calls upon Congress to permanently extend the Section 179 allowance from 2013. Under his proposal, the allowance would be set at $500,000 and the phaseout threshold at $2 million. Starting in 2014, these amounts would be indexed for inflation. Off-the-shelf computer software would permanently qualify for the allowance, but leasehold property would not."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2014-04-09
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Offshore Oil and Gas: Leasing 'Pause,' Federal Leasing Review, and Current Issues [Updated April 29, 2022]
From the Document: "Offshore oil and gas leasing has been affected by executive branch actions pertaining to energy leasing on all federal lands. On January 27, 2021, President Joe Biden issued Executive Order (E.O.) 14008, directing multiple actions to address climate change. Section 208 of the order directed the Secretary of the Interior to 'pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices,' to the extent that such actions were 'consistent with applicable law.' The E.O. directed that the review evaluate 'potential climate and other impacts' associated with oil and gas leasing, as well as whether to adjust royalties paid to the federal government from onshore and offshore oil and gas production to account for 'climate costs."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2022-04-29
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Overview of the Treasury Department's Federal Payment Levy and Treasury Offset Programs [Updated April 22, 2022]
From the Document: "The U.S. Department of the Treasury, through the Bureau of Fiscal Service (BFS), has two programs for collecting delinquent debt owed by individuals, businesses, and other entities to federal and state government agencies. They differ mainly by the type of debt each program collects. The Federal Payment Levy Program (FPLP) collects delinquent 'federal tax debt' only. In this case, the BFS collaborates with the Internal Revenue Service (IRS) to collect this debt by placing a continuous levy on eligible federal payments to delinquent taxpayers. The Treasury Offset Program (TOP) collects a 'variety of state tax and nontax debt and federal nontax debt'. In this case, the BFS collaborates with federal and state government agencies to collect delinquent debt (including past-due child support) by offsetting certain federal payments to delinquent individuals. Federal nontax debt consists of direct loans, defaulted guaranteed loans, administrative debt (e.g., salary and benefit overpayments), and unpaid fines and penalties."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2022-04-22
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Financial Services and General Government (FSGG) FY2019 Appropriations: Independent Agencies and General Provisions [October 26, 2018]
"The Financial Services and General Government (FSGG) appropriations bill includes funding for more than two dozen independent agencies primarily in Title V. These agencies perform a wide range of functions, including the management of federal real property, the regulation of financial institutions and markets, and mail delivery. This report focuses on funding for those independent agencies in Title V of the FSGG appropriations bill. It also addresses general provisions that apply government-wide, which appear in Title VII, and provisions on Cuba sanctions, which would typically appear in Title I. In addition, the FSGG bill funds agencies not covered in this report--the Department of the Treasury (Title I), the Executive Office of the President (EOP; Title II), the judiciary (Title III), and the District of Columbia (Title IV). The bill typically funds mandatory retirement accounts in Title VI, which also contains general provisions applying to the FSGG agencies."
Library of Congress. Congressional Research Service
Webel, Baird; Christensen, Michelle D.; Dilger, Robert Jay, 1954- . . .
2018-10-26
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Automation, Worker Training, and Federal Tax Policy [May 27, 2022]
From the Document: "Technologies that partly or fully automate a variety of tasks are being used with increasing frequency in a range of industries and occupations. These technologies include robotics, machine learning, and other forms of artificial intelligence (AI). This increasing use of automation has fueled the concern that the substitution of machines for humans in a growing number of workplaces will result in massive job losses, especially for unskilled or low-skilled workers. Some predict that if such a scenario were to arise, many displaced workers would face a bleak future marked by fewer job opportunities at lower wages, long-term earnings losses, and poor health. The worker-displacing potential of automation has given rise to a debate over what steps firms, governments, postsecondary schools, and other entities should take, if any, to help displaced workers find well-paying jobs that may or may not be linked to automation. This In Focus looks at how federal tax policy might be used for that purpose. Specifically, it addresses the pros and cons of possible new business tax incentives to encourage employers to invest more in training their employees and to dissuade them from increasing automation investment. This overview does not address possible new tax incentives for individuals to acquire on their own the skills and knowledge they would need to find well-paying jobs."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2022-05-27
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Overview of Major Tax Proposals in the President's FY2012 Budget [May 4, 2012]
"The Obama Administration released the President's FY2012 budget proposal on February 14, 2011. According to the Administration's estimates, the tax proposals in the budget would increase revenues $280 billion over the next 10 years. The Administration's estimates were made relative to a current policy budget baseline, which assumes certain polices that are scheduled to change in the future by law will not. In contrast, the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) make their projections relative to a current law budget baseline, which assumes future policy changes will occur as prescribed by current laws. This difference in baselines may result in the Administration's estimates being different than future CBO and JCT estimates. This report provides a broad overview of the provisions included in the President's budget request. The budget groups proposed tax provisions into several general categories."
Library of Congress. Congressional Research Service
Keightley, Mark P.; Bickley, James M.; Guenther, Gary L.
2012-05-04
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Federal Tax Benefits for Manufacturing: Current Law, Legislative Proposals, and Issues for the 112th Congress [September 20, 2012]
"Congress is considering numerous proposals to create new forms of targeted assistance for the manufacturing sector. One of the more contentious issues in the policy debate concerns the role federal policy should play in the allocation of economic resources to and within the sector. This report examines a key element of current federal support for manufacturing: tax benefits. More specifically, it identifies and describes current federal tax preferences that offer significant benefits for small and large manufacturing firms. To broaden the context for the current policy debate over federal support for manufacturing, the report also provides a brief overview of federal non-tax support for manufacturing. In addition, the report identifies bills in the 112th Congress that would enhance current tax preferences and explains how eligible manufacturers might be affected. It concludes with a discussion of the chief arguments for and against additional targeted support for manufacturing and their implications for federal policy."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2012-09-20
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Targeted Tax Relief for Industries Impacted by the Coronavirus: Selected Policy Issues [March 20, 2020]
From the Document: "One of the policy options being considered to minimize the damage to the U.S. economy from the domestic spread of the coronavirus is tax relief targeted at industries that have experienced substantial drops in revenue. To date, growing numbers of cruise lines, airlines, hotels, restaurants, retailers, and energy producers seem to have been hit the hardest by the economic impact of the virus. Depending on what happens to the spread of the coronavirus within the United States in coming weeks, other industries could be similarly affected. The prospect of a prolonged domestic coronavirus outbreak raises concerns about the solvency of severely affected companies and the job security of their employees. This is a particular concern for smaller firms. Without lines of credit, many of them may find it difficult to stay in business."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-03-20
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Delivery of Economic Impact Payments (EIPs) [Updated August 27, 2020]
From the Document: "To mitigate the financial hardship many Americans are experiencing during the Coronavirus Disease (COVID-19) pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). A critical element of the aid package is direct payments to certain individuals in 2020. The payments are referred to as 'recovery rebates' in Section 2201 of the act, but the Internal Revenue Service (IRS) refers to them as 'economic impact payments' (EIPs) in the information about the payments it sends to the general public. [...] This Insight summarizes the delivery of EIPs so far and identifies issues that have delayed the delivery of payments to certain low-income individuals."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-08-27
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Delivery of Economic Impact Payments (EIPs) [Updated May 26, 2020]
From the Document: "To mitigate the financial hardship many Americans are experiencing during the coronavirus pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). A critical element of the aid package is direct payments to certain individuals in 2020. The payments are referred to as 'recovery rebates' in Section 2201 of the act, but the Internal Revenue Service (IRS) calls them 'economic impact payments' (EIPs) in the notices it shares with the general public. To qualify for a full EIP, an individual's adjusted gross income (AGI) in 2019 cannot exceed $75,000 (or $150,000 for married couples filing jointly). The payment phases out for AGIs between $75,000 and $98,000 for single filers, and between $150,000 and $198,000 for joint filers."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-05-26
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Delivery of Economic Impact Payments (EIPs) [Updated July 7, 2020]
From the Document: "To mitigate the financial hardship many Americans are experiencing during the Coronavirus Disease (COVID-19) pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). A critical element of the aid package is direct payments to certain individuals in 2020. The payments are referred to as 'recovery rebates' in Section 2201 of the act, but the Internal Revenue Service (IRS) calls them 'economic impact payments' (EIPs) in the notices it shares with the general public."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-07-07
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Delivery of Economic Impact Payments (EIPs) [Updated October 6, 2020]
From the Document: "To mitigate the financial hardship many Americans are experiencing during the Coronavirus Disease (COVID-19) pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). A critical element of the aid package is direct payments to certain individuals in 2020. The payments are referred to as 'recovery rebates' in Section 2201 of the act, but the Internal Revenue Service (IRS) refers to them as 'economic impact payments' (EIPs) in the information about the payments it sends to the general public. [...] This Insight summarizes the delivery of EIPs so far and identifies issues that have delayed the delivery of payments to certain low-income individuals."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2020-10-06
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Section 199A Deduction: Economic Effects and Policy Options [January 6, 2021]
From the Introduction: "A key aim of the tax revision enacted in December 2017 (P.L. 115-97, often referred to as the Tax Cuts and Jobs Act, or TCJA) was to reduce the federal tax burden on corporate and noncorporate businesses. Many of the reduction's backers predicted that it would give businesses an added incentive to hire more workers and invest more in tangible and intangible depreciable assets. The law sought to reduce the business tax burden in two ways. [...] This report addresses the Section 199A deduction's possible economic effects. More specifically, it mainly addresses the deduction's impact on (1) investment and employment, (2) horizontal and vertical equity in the federal income tax, and (3) tax administration (as it concerns the cost to taxpayers of complying with tax laws and the cost to the federal government of enforcing such compliance). The report ends with a discussion of policy options for Congress, as it considers whether the deduction should be retained beyond 2025 and whether and how to modify it if the deduction is retained."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2021-01-06
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Research Tax Credit: Current Law, Legislation in the 112th Congress, and Policy Issues [March 7, 2012]
"Technological innovation is a major driving force in long-term economic growth, and research and development (R&D) serves as the lifeblood of innovation. The federal government encourages business R&D in a variety of ways, including a tax credit for a company's increases in spending on qualified research above a base amount. This report describes the current status of the credit, summarizes its legislative history, discusses policy issues it raises, and describes legislation in the 112th Congress to modify or extend it. The report will be updated as warranted by developments affecting the credit. The research credit has never been a permanent provision of the federal tax code and expired at the end of 2011. Since its enactment in mid-1981, the credit has been extended 14 times and significantly modified five times. While the credit is usually assumed to be a single credit, it actually consists of four discrete credits: (1) a regular credit, (2) an alternative simplified credit (ASC), (3) a basic research credit, and (4) an energy research credit. A taxpayer may claim no more than either of the first two and each of the other two, provided it meets the requirements for each."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2012-03-07
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Research Tax Credit: Current Law and Policy Issues for the 113th Congress [October 3, 2014]
"The federal government encourages businesses to invest more in R&D than they otherwise would in several ways, including a tax credit for increases in spending on qualified research above a base amount. This report describes the current status of the credit, summarizes its legislative history, discusses policy issues it raises, and describes legislation to modify and extend it. The report will be updated as warranted by legislative activity or other developments affecting the credit. The research credit (also known as the research and experimentation (R&E) tax credit) has never been permanent. It expired at the end of 2011 and was retroactively extended by the American Taxpayer Relief Act of 2012 (P.L. 112-240) through the end of 2013. Since its enactment in mid- 1981, the credit has been extended 15 times and significantly modified 5 times. While the credit is usually assumed to be a single credit, it actually consists of four discrete credits: (1) a regular credit, (2) an alternative simplified credit (ASC), (3) a basic research credit, and (4) an energy research credit. A taxpayer may claim one of the first two and each of the other two, provided it meets the requirements for each. In essence, the research credit attempts to boost business investment in basic and applied research by reducing the after-tax cost of undertaking qualified research above a base amount, which in theory approximates the amount a company would invest in R&D in the absence of the credit."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2014-10-03
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Research Tax Credit: Current Law and Policy Issues for the 114th Congress [March 13, 2015]
"Economists have gained notoriety for their differences of opinion on a variety of policy issues. Notable examples include the long-term economic effects of large, permanent tax cuts; the impact of illegal immigration on domestic wages; and the best way to achieve price stability, full employment, and greater income equality. But on the issues of the impact of technological innovation on economic growth in the long run and the proper role of government in the development of new technologies, there is relatively little dissent among practitioners of what is known as the dismal science. In general, economists agree that technological innovation has accounted for a major share of long-term growth in real per-capita income in the United States.[…] The federal government supports research and development (R&D) in a variety of ways. Direct support comes mainly in the form of research performed by federal agencies and federal grants for basic and applied research and development intended to support concrete policy goals, such as protecting the natural environment, exploring outer space, advancing the treatment of deadly diseases, and strengthening the national defense. Indirect support is more diffuse. The chief sources are federal funding of higher education in engineering and the natural sciences, legal protection of intellectual property rights, special allowances under antitrust law for joint research ventures, and tax incentives for business R&D investment. [...] This report examines the current status of the research and experimentation (R&E) tax credit, describes its legislative history, discusses some important policy issues raised by it, and identifies legislative proposals in the 113th Congress to extend or otherwise modify the credit. It will be updated to reflect significant legislative activity and other developments affecting the credit's status."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2015-03-13
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Research Tax Credit: Current Law and Policy Issues for the 113th Congress [May 2, 2014]
"Technological innovation is a primary engine of long-term economic growth, and research and development (R&D) serves as the lifeblood of innovation. The federal government encourages businesses to invest more in R&D than they otherwise would in several ways, including a tax credit for increases in spending on qualified research above a base amount. This report describes the current status of the credit, summarizes its legislative history, discusses policy issues it raises, and describes legislation to modify and extend it. The report will be updated as warranted by legislative activity or other developments affecting the credit. The research credit (also known as the research and experimentation (R&E) tax credit) has never been permanent. It expired at the end of 2011 and was retroactively extended by the American Taxpayer Relief Act of 2012 (P.L. [Public Law] 112-240) through the end of 2013. Since its enactment in mid- 1981, the credit has been extended 15 times and significantly modified 5 times. While the credit is usually assumed to be a single credit, it actually consists of four discrete credits: (1) a regular credit, (2) an alternative simplified credit (ASC), (3) a basic research credit, and (4) an energy research credit. A taxpayer may claim one of the first two and each of the other two, provided it meets the requirements for each."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2014-05-02
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Research Tax Credit: Current Law, Legislation in the 113th Congress, and Policy Issues [February 1, 2013]
"Technological innovation is a primary engine of long-term economic growth, and research and development (R&D) serves as the lifeblood of innovation. The federal government encourages businesses to invest more in R&D in several ways, including a tax credit for increases in spending on qualified research above a base amount. This report describes the current status of the credit, summarizes its legislative history, discusses policy issues it raises, and describes legislation in the 113th Congress to modify or extend it. The report will be updated as warranted by legislative activity and other developments affecting the credit. The research credit (also known as the research and experimentation (R&E) tax credit) has never been a permanent provision of the federal tax code. It expired at the end of 2011 and was retroactively extended in early 2013 through the end of that year. Since its enactment in mid- 1981, the credit has been extended 15 times and significantly modified five times. While the credit is usually assumed to be a single credit, it actually consists of four discrete credits: (1) a regular credit, (2) an alternative simplified credit (ASC), (3) a basic research credit, and (4) an energy research credit. A taxpayer may claim one of the first two and each of the other two, provided it meets the requirements for each."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2013-02-01
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Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 113th Congress, and Economic Effects [October 3, 2014]
"Expensing is the most accelerated form of depreciation for tax purposes. Section 179 of the Internal Revenue Code allows a taxpayer to expense (or deduct as a current expense rather than as a capital expense) up to $25,000 of the total cost of new and used qualified depreciable assets it buys and places in service in 2014, within certain limits. Firms unable to take advantage of this allowance may recover the cost of qualified assets over longer periods, using the appropriate depreciation schedules from Sections 167 or 168. While the Section 179 expensing allowance is not targeted at small firms, the limits on its use tend to confine its benefits to such firms. In addition, Section 168(k), which provides a so-called bonus depreciation allowance, has allowed taxpayers to expense a portion of the cost of qualified assets bought and placed in service in recent tax years. Taxpayers that could claim the allowance had the option of monetizing any unused alternative minimum tax credits left over from tax years before 2006, within certain limits, and recovering the cost of the assets that qualified for the allowance over longer periods. The allowance expired at the end of 2013."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2014-10-03
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Individual Income Tax Rates and Other Key Elements of the Individual Income Tax: 1988 To 2013 [February 1, 2013]
"Statutory individual income tax rates are the tax rates that apply by law to various amounts of taxable income. Statutory rates lay the foundation for marginal and average effective tax rates, which most economists believe have a greater impact on the economic behavior of companies and individuals than statutory rates. Marginal effective rates reflect the net effect of special tax provisions on statutory rates. They are to be distinguished from average effective rates, which measure someone's tax burden. Current statutory and effective individual tax rates are the result of the Tax Reform Act of 1986 (TRA86; P.L. 99-514) and several tax laws that have been enacted since 1986. […] This report summarizes the tax brackets and other key elements of the individual income tax that help determine taxpayers' marginal and average effective tax rates going back to 1988. It is updated annually to reflect the most recent indexation adjustments and any statutory changes."
Library of Congress. Congressional Research Service
Guenther, Gary L.
2013-02-01
