Budget Deal Ending Government Shut-Down Includes Tax Extenders

By:
Chris Gaetano
Published Date:
Feb 9, 2018
Congress

The federal government briefly shut down for the second time this year as the deadline for approving a budget deal to keep it funded was held up by Rand Paul (R - Kentucky), forcing lawmakers to stay on the Hill until the early morning hours as they tried to convince the recalcitrant senator to support the bill, according to the Washington Post. Unlike the last shutdown, which lasted through the weekend, this one lasted for only a few hours, but it none the less drew the ire of Paul's fellow Republicans, who felt he was being childish and that his refusal amounted to nothing more than grandstanding. The bill increases federal spending by $300 billion and suspends the debt ceiling for a year, which is exactly why Paul, a strict libertarian literally named after Objectivist author Ayn Rand, opposed it. He excoriated congressional Republicans for being against deficits when Obama was in office but being apparently okay with them now that their own party is in power. Despite already having the votes to pass, Paul was able to hold up the process for five hours, much to the chagrin of fellow Kentuckian and Senate Majority Leader Mitch McConnell. While he demanded an amendment preserving the debt ceiling, ultimately he did not win and the legislation was able to pass the Senate, then the House a few hours later, before ultimately being signed into law by the president. 

So where is all that extra spending going to go? The bill extends numerous soon-to-be-expired tax provisions through 2017, including exclusion of discharge of qualified principal residence indebtedness from gross income, the above-the-line deduction for qualified tuition and related expenses for higher education, the Indian employment tax credit, the treatment of qualified mortgage insurance premiums as interest for the purposes of the mortgage interest deduction, empowerment zone tax incentives, credits for energy efficient homes, among many, many others.

The bill also has many other miscellaneous provisions beyond tax extenders, which includes: 

* If the IRS wrongfully imposes a levy on a retirement plan, they must now reimburse not only the amount initially levied, but interest, and this money can be added to retirement plans without respect to normal contribution limits. 

* The IRS will publish a simplified 1040SR for senior citizens. 

* Attorney fees and court costs for whistleblowers can now be deducted. 

* Certain philanthropic business holdings will now be excluded from the excess business holding rules. 

* Employees will no longer be prohibited from making elective deferrals or employee contributions for six months after getting a hardship distribution if they want that distribution to be deemed necessary to satisfy immediate and heavy financial need. 

* Opportunity Zones can now be expanded to Puerto Rico. 

* Certain foreign income for Americans living abroad may now be excluded from gross income. 

The bill also provides increased aid to victims of wildfires and hurricanes, and increases military spending by $160 billion, according to the Washington Post

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