Thursday, August 12, 2010

The XXXXXX Act of XXXX, i.e. the emergency education funding bill

This past Tuesday, President Obama signed into law an emergency jobs bill designed to protect jobs in the public sector. The measure will, according to its proponents, save 300,000 teachers and other public employees from being laid off due to shrinking state and local revenues.

The bill was offered in such an abbreviated period of time it had yet to receive a name prior to being signed into law. Thus, the bill's official title is 'XXXXXX Act of XXXX.'

The funds for the measure will be primarily provided through two separate initiatives: the elimination of selected tax breaks for income earned outside the United States, and a reduction in the food stamps program.

The bill, in its original form, was a resolution regarding funding for the modernization of air safety equipment under the FAA's jurisdiction. It was subsequently modified to at first impose additional taxes on bonuses received by employees of companies who had received TARP bailout funds from the government, and later modified again to allocate the aforementioned additional funds for public employees.

As signed into law, the bill mandates no less than $10 billion dollars be allocated for the Education Jobs Fund. The funds will be allocated by the Secretary of Education to be used in either the 2010-2011 or 2011-2012 school years. The funds may be used solely for employment expenses, such as the retaining, re-hiring or hiring of personnel, and may not be used for administrative expenses. The funds also may not be used as a reserve against future expenses, nor may they be used to pay off existing debt.

The bill prohibits dividing the foreign tax credit previously available to individuals and corporations from the related income. Also, the bill eliminates the foreign tax credit with respect to income earned overseas that is not subject to taxation here by reason of covered asset acquisition.

More on the bill next week.

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