Neil's Spotlight “Emergency Economic Stabilization Act of 2008” helps Hawaii’s economy, businesses and residents
October 3, 2008
(10/3/08) The "Emergency Economic Stabilization Act of 2008" includes energy, extenders, AMT and Disaster Tax provisions that will help Hawaii's economy. The House approved the financial rescue measure on Friday, October 3, 2008. Here's a closer look at some of the provisions.
I. RENEWABLE ENERGY INCENTIVES
Long-term Extension and Expansion for Solar Energy. The bill extends for eight-years the 30% investment tax credit for solar energy property. It also extends for eight-years the credit for residential solar property and removes the credit cap (currently $2,000) for solar electric investments.
Long-term extensions (eight years as opposed to one or two) will allow businesses to plan large scale projects. Moreover, Hawaii residents will be able to purchase solar water heaters and solar fans and claim the entire purchase price as a tax credit. This will generate 8,000 direct and indirect jobs in Hawaii by 2016. Most importantly, solar energy use in Hawaii will increase dramatically.
Producing Renewable Energy. Extends for two-years a tax credit for energy from geothermal, hydropower, landfill gas, and municipal waste. Expands credit to include energy from marine renewables. Tax credit for wind energy is extended for one year.
Finally, the renewable energy source that surrounds Hawaii would qualify for a federal tax credit. Wave buoys and ocean thermal engineering are among the qualifying technologies.
Cellulosic Biofuels. Taxpayers are allowed to immediately write off 50% of the cost of facilities that produce cellulosic biofuels/ethanol if such facilities are placed in service before January 1, 2013.
This will help advance the production of biofuels in Hawaii, to replace imported oil and ethanol.
II. TRANSPORTATION & ENERGY CONSERVATION
Plug-in Electric Drive Vehicles. The bill establishes a new credit for plug-in electric drive vehicles. The credit ranges from $2500 to $7500. The bill also extends the 30% credit for alternative refueling property, such as natural gas, E85 pumps, or electric vehicle recharging infrastructure through 2010.
Hawaii is in a unique position to advance electric cars. This credit can help transform the way we get our “gasoline” in Hawaii and save drivers money at the pump.
Bicycle Commuters. The bill allows employers to provide employees who commute to work by bicycle limited fringe benefits to offset the costs of such commuting (e.g., storage).
Qualified Energy Conservation Bonds. The bill creates a new category of tax credit bonds for state and local governments to make energy conservation investments in public infrastructure and for research.
Hawaii would receive approximately $3,400,000 of qualified energy conservation bonds.
Incentives for energy conservation in commercial buildings, residential structures, and energy efficient appliances. The bill extends the tax credit for energy-efficient existing homes for 2009, the cost of energy-efficient property installed in commercial buildings through December 31, 2013, a credit for the construction of energy-efficient new homes, and a manufacturer tax credit for the domestic production of energy-efficient dishwashers, clothes washers and refrigerators.
III. ALTERNATIVE MINIMUM TAX
AMT Patch. Currently, a taxpayer receives an exemption of $33,750 (individuals) and $45,000 (married filing jointly) under the AMT. Current law also does not allow personal credits against the AMT. The provision expired December 31, 2007. The proposal increases the exemption amounts to $46,200 (individuals) and $69,950 (married filing jointly) for 2008. The proposal will also allow the personal credits against the AMT. In Hawaii, 91,254 households paid the AMT in 2007, 50,651 in the 1st Congressional District.
IV. SCHOOLS/EDUCATION BASED PROVISIONS
The deduction for qualified higher education expenses expired on December 31, 2007. The maximum deduction was $4,000 for taxpayers with an Adjusted Gross Income of $65,000 or less ($130,000 for joint returns) or $2,000 for taxpayers with AGI of $80,000 or less ($160,000 for joint returns). The proposal would extend the deduction to the end of 2009. The measure also expends the same expiring deduction allowing teachers up to $250 for educational expenses.
Qualified Zone Academy Bonds (QZABs) help Hawaii school districts save on interest costs associated with public financing school (below the post-secondary level) renovations and repairs. The QZABs offer the holder a federal tax credit instead of interest. This proposal allows another $400 million of issuing authority to state and local governments for 2008 and 2009 for qualified zone academy bonds.
There are also provisions in this measure that would extend through 2009 provisions to encourage Hawaii businesses to contribute computer equipment and software to elementary, secondary, and post-secondary schools, to contribute food inventory, to donate books to schools, public libraries and literacy programs, by allowing an enhanced deduction. The proposal is effective for contributions made during taxable years beginning after December 31, 2007.
V. Other Tax Provisions
Other tax provisions that will help the Hawaii taxpayer are the additional standard deduction for real property taxes. The real property tax deduction is the lesser of the amount allowable as a deduction of state, local and foreign real property taxes, or $500 ($1,000 in the case of a joint return). The Hawaii taxpayer will also benefit from the Child Tax Credit. Currently, a taxpayer receives $1,000 tax credit for each qualifying child under the age of 17. If the amount of a child tax credit is greater than the filer’s income tax, they may receive a refund if the income threshold is met: $12,050 in 2008. The proposal lowers the refundable threshold for the child tax credit to $8,500 for the 2008 tax year.
The Pension Protection Act of 2006 (PPA) created a provision allowing taxpayers to make tax-free contributions from their IRA plans to qualified charitable organizations. The proposal would extend the provision through 2009. The proposal is effective for distributions after December 31, 2007, and will help Hawaii citizens use their standard distributions to make tax free contributions to charitable organizations in their communities. I am a cosponsor of this legislation.
The bill would aid Hawaii high technology businesses by extending the research tax credit to the end of 2009. In addition, the proposal would increase the alternative simplified credit from 12% to 14% for the 2009 tax year, and repeal the alternative incremental research credit for the 2009 tax year. The proposal is effective for amounts paid or incurred after December 31, 2007.
This bill would help Hawaii restaurants and retail owners by extending the provision to the end of 2009 and allow retail owners and new restaurants to receive the shortened recovery period for 2009 only. The extension is effective for property placed in service after December 31, 2007. The allowance of the 15 year depreciation to retail and new restaurants is effective for property placed in service after December 31, 2008.
This bill also helps companies that operate in our other “neighbor island” American Samoa. Certain domestic corporations operating in American Samoa were eligible for a possessions tax credit, which offsets their U.S. tax liability on income earned in American Samoa from active business operations, sales of assets used in a business, or certain investments in American Samoa.
The bill extends a provision allowing for the expensing of costs associated with Hawaii companies that take responsibility for cleaning up contaminated sites. This proposal extends present law to the end of 2009. The proposal is effective for property placed in service after December 31, 2007.
The bill also contains provisions related to film and television production credits, which may help film productions stay in Hawaii and provide local jobs.
The bill contains a provision to Hawaii’s farmers purchase equipment. The measure contains a five year recovery period for any machinery or equipment (other than any grain bin, cotton ginning asset, fence, or other land improvement) which is used in a farming business, the original use of which commences with the taxpayer, and placed in service before January 1, 2010. The proposal is effective for property placed in service after the December 31, 2008.
