On Friday, the president signed a spending and tax package worth $1.8 trillion. The spending bill will fund the federal government through next September and the tax package, creates, extends or makes permanent several tax breaks worth over $622 billion. While there are critics of the package—the tax incentives are not offset by spending cuts and the spending bill exceeds the 2011 spending caps set by Congress—many praise the passage of the package as a bipartisan accomplishment.
“The Senate has wrapped up a successful year under new leadership, and we achieved some significant bipartisan accomplishments, including the measure we passed today,” Kentucky U.S. Sen. Mitch McConnell said about the package Friday.
The president’s signature also lifted the 40-year ban on crude oil exports a measure that the House of Representatives had passed in October.
In an interview with the Kentucky Chamber, Congressman Ed Whitfield described his support for lifting the ban. “Kentucky like many states will benefit because there will be jobs created from this.” He further explained that, “The U.S. is one of a very few countries in the world that there is a law that says you can’t export oil.” Watch the Congressman’s full discussion of lifting the ban on oil exports here:
Agreement on the bill represents a give and take between parties. As part of the deal to lift the ban on oil exports, two wind and solar tax credits were extended for five years. Further, two policy riders that block the administration from adopting campaign finance regulations were included in the measure. The Securities and Exchange Commission won’t be able to require corporations to disclose political giving, for example. However, multiple policy riders including rollback of parts of the Dodd-Frank Wall Street Reform Act and efforts to stymie new carbon dioxide rules implemented by the Environmental Protection Agency were not included in the final package. At a cost of $35 billion, two taxes that fund the Affordable Care Act, one on expensive health plans and one on medical devices, were frozen temporarily.
The following is an overview of major tax changes and Kentucky-specific funding in the 2,000+ page law:
Business Tax Relief
- Section 179 Expanded Limits become permanent: This portion of the tax code now permanently allows small businesses to immediately deduct up to $500,000 in investments instead of $25,000.
- Bonus depreciation is extended until the end of 2019: Though not extended permanently, the law does allow for businesses to immediately deduct 50 percent of some investments for another five years.
- Research and Experimentation Credit becomes permanent: This tax credit is important for business that engages in certain research activities. Making the credit permanent ensures support for longer term investments.
Energy and Infrastructure Investments
- Paducah Gaseous Diffusion Plant: $200 million for vital cleanup work to continue at the facility and help support 1,600 jobs at the site.
- Coal Carbon Capture and Storage Research: $632 million for Fossil Energy Research Development.
- Infrastructure investment on the Ohio River: $180 million for the Olmsted Lock and Dam will allow Kentucky coal and agricultural products—as well as other commodities shipped over our waterways superhighway—to move more efficiently to market. The project also helps support Kentucky workers in the inland waterways industry.
Eastern Ky. Economic Development (according to the office of Sen. McConnell):
- $146 million for the Appalachian Regional Commission(ARC). The independent agency supports economic and community development in the Appalachian region, including eastern Kentucky.
- $50 million in ARC funding for the POWER Plus Plan. This new program will support economic development projects in Appalachia that have been devastated by layoffs in the coal sector.
- $10 million in ARC funding for broadband developmentin Central Appalachia.
- $19 million for Workforce Innovation and Opportunity Act (WIOA) training for dislocated coal workers. Similar Department of Labor grants which Senator McConnell has helped secure for the Eastern Kentucky Concentrated Employment Program have funded the Hiring Our Miners Everyday (HOME) program, which has provided job training and employment services to thousands of Kentuckians.
- Two-year extension of the Empowerment Zones tax credits, which will help southeastern Kentucky’s Empowerment Zone – designated as such with the objective of revitalizing an economically distressed region.
- $90 million for the Abandoned Mine Land (AML) pilot program. This new pilot program provides grants to be split between three Appalachian states for the purpose of reclaiming abandon mine land sites and to spur economic development in the region.