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February 4, 2014
Press Release

(WASHINGTON, DC / January 27, 2014): Congressman Richard E. Neal, Ranking Member of the House Ways and Means Select Revenue Subcommittee, last week introduced legislation to jumpstart the sluggish economy, finance critical infrastructure investments, fight income inequality and create jobs.  The Invest in US Act, extends and reauthorizes key bond measures beneficial for our states and municipalities, extends several critical tax credit initiatives, sets up an infrastructure bank, increases the minimum wage and provides small businesses with tax relief.

"Right now the U.S. economy is stuck in a rut, the unemployment rate remains stubbornly high and the growing income inequality in America threatens to derail our economy altogether,"  Neal said.  "In December 2013, we saw the economy only add 74,000 jobs, our lowest since 2011.  According to the Bureau of Labor and Statistics, in 2013 the economy averaged adding 183,000 jobs a month.  At this current rate, the Federal Reserve says the unemployment rate will remain above 6.5 percent until 2015.  This is simply unacceptable, and America can do better, and we must. The recession has wiped out 8 million jobs, and it is imperative that we get them back.  That is why I introduced the Invest in US Act.  This legislation will go a long way in creating an environment where our economy can take off by making the strategic investment needed to spur growth.  Furthermore, the legislation takes full aim at the growing income inequality by increasing the minimum wage, while also providing tax relief for businesses that hire new employees and buy new equipment."

Below please find a summary of the legislation.

The Invest in US Act at a glance:
Tax Provisions

  • New Markets Tax Credit –Extends and expands the New Markets Tax Credit program.  The New Markets Tax Credit program is made permanent, with an allocation amount of $5 billion annually.  By permanently extending the NMTC, the legislation ensures that communities will continue to receive investments they need to renew, rebuild and refurbish neighborhoods for generations to come.
  • Build America Bonds (BABs) – Makes the BABs program permanent, starting with a 32 percent subsidy rate in 2013, and phasing down to a 28 percent subsidy rate in 2017 and thereafter.  BABs unleash job creation, economic growth and spur private-sector investments in infrastructure.  From the inception of the program in April 2009 to when it expired at the end of 2010, there were 2,275 separate BABs issues, which supported more than $181 billion of financing for new public capital infrastructure projects, such as schools, bridges and hospitals.
  • Research and Development Tax Credit. Makes permanent and expands the R&D Tax Credit.  The legislation also increases the the rate of the Alternative Simplified Credit (ASC) from 14 to 17 percent.
  • AMT repeal on Private Activity Bonds – Eliminates the Alternative Minimum Tax (AMT) on private activity bonds (PABs).  PABs are a form of municipal bonds that are used by a variety of public and non-profit entities such as airports, seaports and student loan issuers.  The AMT penalty attached to these bonds results in higher interest rates which correlate to higher infrastructure project costs and higher student loan rate burdens.
  • Facility Water & Sewer Bonds – Exempts water and sewer projects from the private activity bond (PAB) cap.  Currently, the tax code limits the amount of tax-exempt private activity bond debt that can be issued annually in a state.  The legislation excludes the PABs issued by water and sewage facilities from the state volume cap.  Removing the volume cap makes additional private investment capital available for these types of infrastructure facilities.
  • Work Opportunity Tax Credit. - Makes the Work Opportunity Tax Credit (WOTC) permanent.  The tax credit expired at the end of 2013.  The WOTC provides a federal tax credit up to $9,600 for businesses that hire targeted individuals.  Since 1996, the WOTC has expired numerous times.  Making the credit permanent will end the uncertainty surrounding the credit for employers and potential hires.
  • Jobs Training Tax Credit.  The legislation incorporates Senator Menendez's common sense proposal that links community colleges with local businesses to train employees.  Like Senator Menendez's proposal, this bill provides $1 billion in funding for a competitive tax-credit initiative that encourages colleges and businesses to form job-training partnerships.  The proposal also would provide a community college tuition tax credit of up to $4,000 to any U.S. based business that trains a long-term unemployed person for an open job that requires a certain type of certificate or other training credential.
  • Extends Increased Business Expensing.  This provision permanently extends the 2013 section 179 expensing and investment limitations of $500,000 and $2 million.  This provision is effective for qualifying property placed in service after December 31, 2013.
  • Permanent of the 15-Year Depreciation Schedule. Makes permanent the 15-year depreciation schedule for leasehold improvements, restaurant improvements and new construction, and retail improvements.  Currently this is a temporary provision that must be extended annually.  By making this provision permanent we are providing businesses with the certainty they need to undertake capital expenditures, which fuel economic activity and create jobs.

Other Provisions

  • Infrastructure Bank.  In 2013, the American Society of Civil Engineers gave the United State's infrastructure a grade of D+ and estimated that the US will need to invest an additional $1.6 trillion to fix our infrastructure.  The Invest in US Act creates the American Infrastructure Financing Authority (AIFA), which is an independent, wholly-owned government infrastructure bank, to assist in funding some of the critical infrastructure needs.  Under the proposal, Department of Treasury will make available $10 billion in seed money to encourage private investment in public works projects.  It is estimated that this self- sustaining entity could be capable of leveraging as much as $625 billion in private investment by issuing direct loans, loan guarantees, bonds and debt securities.  To keep both the costs and risks low, the AIFA is also barred from financing more than 50 percent of any one project.
  • Increase in Minimum Wage.  The legislation increases the federal minimum wage to $10.10 an hour from the current $7.25.  This increase is phased in over four years and in three increments of 95 cents.  Thereafter, the minimum wage will increase as the cost of living increases.