Keep Calm with Appropriations and Carry On

Posted on June 14, 2017

Despite having no budget resolution and discretionary spending levels, the House and Senate Appropriations committees have decided to move forward with crafting draft bills.

Lawmakers of both parties and in both chambers have predicted the need for another stopgap measure to extend current funding levels when FY 2018 begins on October 1, 2017.

Without any budget in place or the prospect of one coming soon, congressional leaders understand that they must have some sort of spending package ready to avoid a government shutdown. Additionally, writing detailed spending bills that fund lots of popular programs is easier than navigating the treacherous politics involved in constructing a bipartisan deal over spending limits.

That said, the House and Senate are taking different approaches to crafting their bills.

On Monday, the House Appropriations Committee has released its version of the FY2018 Military Construction – VA appropriations bill. The first of the 12 annual spending bills Monday night — a popular measure funding the Department of Veterans Affairs and construction projects at military bases. The $88.8 billion measure is $6 billion over FY2017 levels, despite FY2018 sequester levels being less than FY2017 levels. It is unclear where the $88.8 billion figure came from. The House Appropriations Committee is expected to vote on the measure as soon as Thursday and more bills are expected to be released soon.

Late Tuesday, Senate Majority Leader Mitch McConnell, (R-KY) said that spending bills in the Senate would be written using FY 2017 funding levels as a guidepost.

If no new budget deal is cut, the House and Senate are confined to the levels set by the 2011 deficit-cutting law, the Budget Control Act (BCA), which is also known as the Sequester. That law would require cutting about $5 billion from the agreement reached to set FY2017 levels.

Collins to Stay On as NIH Director

Posted on June 7, 2017

Yesterday, the White House announced that Dr. Francis Collins will continue to serve as Director of the National Institutes of Health (NIH). Collins has led the NIH since 2009 and previously led the NIH Human Genome Research Institute.

Earlier this year, a bipartisan group of Congressional leaders wrote a letter to the President asking him to keep Collins.

Appeals Court Upholds Block on Administration Travel Ban

Posted on May 25, 2017

The Fourth Circuit Court of Appeals has upheld the block on the second version of the Administration travel ban. A federal judge in Maryland originally blocked the ban from going into effect earlier this year. The Fourth Circuit covers the following states: Maryland, North Carolina, South Carolina, Virginia, and West Virginia.

The Ninth Circuit Court of Appeals has yet to rule on a similar block issued by a judge in Hawaii.

Tax Provisions in the FY 2018 Administation’s Budget Proposal

Posted on May 25, 2017

In an effort to set the agenda for tax reform later in the 115th Congress, the New Foundation for American Greatness Budget for FY 2018 does contain a number of tax provisions in various sections. The White House Budget provides few specific details about the Administration’s plans for tax reform, noting that details “will be released at a later date.” No Green Book has been issued.

Core principles:

Lower individual income tax rates
End the Alternative Minimum Tax
Expand the standard deduction
Protect charitable giving

Specific provisions within the FY 2018 Budget include:

Exclusion of scholarship and fellowship income — Scholarships and fellowships are excluded from taxable income to the extent they pay for tuition and course-related expenses of the grantee. Similarly, tuition reductions for employees of educational institutions and their families are not included in taxable income.

Tax credits and deductions for post-secondary education expenses — The budget would not allow credits for particular activities, investments, or industries.

Deductibility of student loan interest — The budget accepts current law’s general rule limiting taxpayers’ ability to deduct non-business interest expenses.

Qualified tuition programs — The budget generally would tax all income under the regular tax rate schedule. It would not allow preferentially low (or zero) tax rates to apply to certain types or sources of income.

Exclusion of interest on student-loan bonds —The budget generally would tax all income under the regular tax rate schedule. It would not allow preferentially low (or zero) tax rates to apply to certain types or sources of income.

Exclusion of interest on savings bonds redeemed to finance educational expenses —The baseline tax system generally would tax all income under the regular tax rate schedule. It would not allow preferentially low (or zero) tax rates to apply to certain types or sources of income.

Discharge of student loan indebtedness — Under the baseline tax system, all compensation, including dedicated payments and in-kind benefits, would be included in taxable income.

Education Individual Retirement Accounts (IRA) —The baseline tax system generally would tax all income under the regular tax rate schedule. It would not allow preferentially low (or zero) tax rates to apply to certain types or sources of income.

Parental personal exemption for students age 19 or over —Under the baseline tax system, a personal exemption would be allowed for the taxpayer, as well as for the taxpayer’s spouse and dependents who do not claim a personal exemption on their own tax returns. To be considered a dependent, a child would have to be under age 19.

Exclusion of employer-provided educational assistance —Under the baseline tax system, all compensation, including dedicated payments and in-kind benefits, would be included in taxable income because they represent accretions to wealth that do not materially differ from cash wages.

Exclusion of interest on bonds for private nonprofit educational facilities —The baseline tax system generally would tax all income under the regular tax rate schedule. It would not allow preferentially low (or zero) tax rates to apply to certain types or sources of income.

Expensing of research and experimentation expenditures (normal tax method) —The baseline tax system would allow a deduction for the cost of producing income. It would require taxpayers to capitalize the costs associated with investments over time to better match the streams of income and associated costs. Research and experimentation (R&E) projects can be viewed as investments because, if successful, their benefits accrue for several years. It is often difficult, however, to identify whether a specific R&E project is successful and, if successful, what its expected life will be. Because of this ambiguity, the reference law baseline tax system would allow expensing of R&E expenditures.

Credit for increasing research activities —The baseline tax system would uniformly tax all returns to investments and not allow credits for particular activities, investments, or industries.

Exclusion of employee meals and lodging —Under the baseline tax system, all compensation, including dedicated payments and in-kind benefits, would be included in taxable income.