WASHINGTON, DC - Congress is poised to consider a compromise package of tax cuts and benefit extensions before Memorial Day that includes several key initiatives authored by U.S. Senator Jack Reed (D-RI).

The American Jobs and Closing Tax Loopholes Act will provide $30 billion in tax breaks to families and businesses, as well as aid for state and local governments. The tax breaks would be retroactive to January 1, 2010.

"This bill will provide tax cuts to help businesses create jobs while providing additional relief to families hit hardest by the recession," said Reed. "This legislation builds on the historic tax cuts that were included in the Recovery Act and are continuing to provide tax relief to 95 percent of working families. Over the last year and a half, Senate Democrats and the Obama Administration have greatly reduced the tax burden of middle-class families and businesses that hire new workers."

According to USA Today, Americans paid their lowest level of taxes in 2009 since the Truman administration.

In order to help pay for these middle-class tax cuts, this bill treats the income earned by financiers and private equity funds the same way as employment income earned by the average Rhode Islander. Instead of being considered as capital gains, 75% of their carried interest would be treated as ordinary income for tax purposes. Only the remaining 25% would be taxed as capital gains. The bill also limits the ability of corporations to use foreign tax credits.

The bill also contains three critical provisions championed by Senator Reed:

• Extending eligibility for unemployment insurance and COBRA health benefits through December 31, 2010 and fixing a glitch in the Emergency Unemployment Compensation program to prevent the unemployed from being penalized for taking up part-time work.
• Providing $1 billion for Reed's National Housing Trust Fund to help communities build, preserve, and rehabilitate affordable rental homes; and
• Providing an estimated $100 million in additional federal Medicaid funding (otherwise known as FMAP) for Rhode Island to help with the state's budget problems.

The bill also extends the National Flood Insurance Program (NFIP) through the end of the year. Currently, the NFIP is authorized to write and renew flood insurance coverage through May 31, 2010. The bill would extend the NFIP's authority to write and renew flood insurance coverage through December 31, 2010 and help provide needed stability in the nation's housing markets.

"Rhode Islanders have received over $300 million in federally-funded unemployment insurance benefits during the recession," noted Reed, who authored the Unemployment Compensation Extension Act of 2008 (P.L.110-449). "Extending this critical lifeline through the end of this year will inject over $30 million per month into the Rhode Island economy."

"We need to incentivize people to find work, not unfairly punish folks who were able to find short-term, temporary employment," continued Reed. "This bill fixes that glitch and rewards people who are doing everything they can to find a short-term job and provide for their families."

"I am also extremely pleased that we were able to include funding to jumpstart the National Housing Trust Fund. This infusion of capital funds will support the immediate production of 10,000 rental homes, creating 15,000 new construction jobs and 4,000 new jobs in ongoing operations. And it will help provide a safe, affordable place to live for thousands of our neediest families," stated Reed.

"Passing the FMAP extension is necessary to preserve jobs, and it must be done quickly," said Reed, who authored the Transitional Federal Medical Assistance Percentage Act to extend FMAP benefits.

The American Jobs and Closing Tax Loopholes Act will first be considered by the U.S. House of Representatives. The original legislation, the Tax Extenders Act of 2009, passed the House of Representatives on December 9, 2009. The Senate passed a similar package, the American Workers, State and Business Relief Act, as an amendment to that bill on March 10, 2010.

This legislation represents the merging of the two bills and they must now be passed by both the House and the Senate before going to President Obama's desk to be signed into law.