Spending Bill Passes House, Heads to Senate

December 18, 2019

On Dec. 16, lawmakers unveiled a dozen bills that would allocate $1.4 trillion in federal spending for the remainder of the fiscal year to prevent the government from shutting down at midnight on Friday, Dec. 20.

House Democrats split all 12 fiscal 2020 spending bills into two packages for floor consideration on Tuesday. First, the House voted 297-120 to pass a domestic spending package. The minibus, H.R. 1865,  would boost funding through the Sept. 30 end of the fiscal year for the departments of Transportation, Education, Health and Human Services, Agriculture and Housing and Urban Development. It would also fund the departments of Interior, Labor, State, Veterans Affairs and Energy, as well as water projects, the FDA, congressional operations and military construction work.

Next, the House passed, a four-bill bundle, H.R. 1158, that would fund the military, as well as the departments of Homeland Security, Commerce, Treasury and Justice, plus the IRS and the National Science Foundation. In a 280-138 vote, the chamber sent the fiscal 2020 measure on to the Senate, where lawmakers are expected to clear the legislation, and for President Donald Trump’s signature later this week.

Several provisions of importance to NSBA and small businesses included in the year-end spending bill are:

Extenders: The deal would renew – generally through 2020 – the temporary tax “extenders” provisions that expired in 2017 and 2018, as well as those that are scheduled to expire at the end of 2019. The subpart F lookthrough rule for controlled foreign corporations, the Work Opportunities Tax Credit, the New Markets Tax Credit, and the temporary tax credit for employers offering paid family and medical leave, which are currently set to expire at the end of 2019, are extended, but only for one year.

Affordable Care Act Taxes: Among the provisions included is Congress is expected to permanently repeal the Affordable Care Act’s (ACA’s) health insurance tax (HIT), medical device and “Cadillac” taxes as part of a must-pass spending agreement. None of the taxes are in effect now, but the health insurance and device taxes were expected to resume next year. NSBA has long supported the full repeal of all three of this health tax measures.

The medical device tax and health insurance tax have been intermittently implemented, while Congress preserved a moratorium on the Cadillac tax until 2022. The House voted overwhelmingly over the summer to drop it completely and last week Senate Minority Leader Chuck Schumer (D-N.Y.) first pushed for a full repeal as part of the spending deal.

The move all but guts the funding provisions for the Affordable Care Act, with the Cadillac tax repeal alone projected to cost nearly $200 billion. An outdated 2015 estimate from the CBO said a medical device tax repeal would cost about $24 billion over a decade, while the IRS estimated earlier this year that a repeal of the health insurance tax would amount to $15.5 billion just in 2020.

Retirement Savings: The tax package includes bipartisan retirement savings legislation—the SECURE Act, which cleared the House in May—aimed at making it easier for smaller businesses to offer tax-qualified retirement savings plans to their employees, encouraging individuals to participate in retirement plans, and promoting savings for certain nonretirement expenses.

Export-Import Bank: The spending deal includes a provision to extend the Export-Import Bank’s charter for seven years. The legislation would also revise the bank’s small-business policy, requiring the percentage of exports financed by small businesses to rise to 30 percent from 25 percent starting in 2021. NSBA has been an outspoken supporter of Ex-Im Bank. Click here for more details.