On Friday, May 28, the House narrowly passed a package extending numerous expiring tax credits. The American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213) contains the extension of the New Energy Efficient Home Tax Credit, Section 45L. The package contains a one-year extension of a $1,000 tax credit to the manufacturers of an ENERGY STAR HUD code home and a $2,000 tax credit to modular homebuilders. The bill was passed by a vote of 215-204. Members of Congress struggled to garner the necessary votes to pass this bill because many fiscally conservative Democrats objected to the overall cost of the legislation. While MHI strongly supports the extension of the Energy Star tax credit for manufactured and modular housing; we are strongly opposed to the change in the taxation of “carried interest” as the central revenue offset to pay for the bill. Under the present law, income generated by carried interest in a partnership is taxed as capital gains.
Under the House plan, for 2011 and 2012 carried interest would be taxed as 50 percent capital gains, 50 percent ordinary income. In 2013, the tax would increase to 75 percent ordinary income and 25 percent capital gains. While the Senate is expected to take up HR 4213 as one of its first orders of business when it returns from the Memorial Day recess, it remains unclear if there is enough support to pass the bill in its present form.
MHI members with questions can contact Rae Ann Bevington at email@example.com.