House Ways and Means OKs Stimulus Bill

October 15, 2001 (PLANSPONSOR.com) - The U.S. House Ways and Means Committee, on a party-line vote of 23 to 14, approved a $100 billion package of GOP-drafted tax breaks for businesses and individuals designed to perk up the economy.

The approved bill goes further than the $60 billion President Bush has indicated he favors ? but gives too many benefits to corporations and wealthy individuals for the comfort of House Democrats.

About 70% of the almost $100 billion in tax benefits that would flow in fiscal 2002 go to businesses. Over the next decade, the bill passed by Ways and Means would cost the federal government nearly $160 billion in lost revenues.

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Employment Related Impacts

Along with tax breaks, the GOP stimulus package would provide about $12 billion in federal funds to states to allow them to offer more income and health care support payments to jobless workers. Democrats tried to offer amendments that would have boosted that total but lost on largely party-line votes.

The bill also includes a provision that would allow individuals to withdraw funds without penalty from individual retirement accounts (IRAs) and other retirement plans such as 401(k)s to help pay for health insurance premiums.

Investment Incentives

To encourage business investment, the House bill includes a package of mainly temporary (three-year) tax breaks that would encourage companies to invest in new plant and equipment by allowing them to recoup the cost of such spending more quickly. Companies would be allowed to claim an extra 30% first year depreciation for investments in new plant and equipment during the three years beginning Oct. 12, 2001.

Additionally, companies that qualify for expensing – generally smaller firms – would be allowed to immediately write off up to $35,000 of new investments during the next three years, compared with the current $24,000 a year.

For the next three years businesses would be permitted to carry net operating losses back five years (versus two years under current law) to offset past profits. This would allow previously profitable firms to convert current losses into a cash refund from the Internal Revenue Service.

The bill would also repeal the corporate version of the Alternative Minimum Tax retroactive to 1986, when the current version was enacted. That would allow firms to convert unused AMT credits into immediate cash ? generating an estimated $25 billion in refunds from the IRS.

Individual Impetus

For individuals, the bill includes:

  • a one-time federal payment to low-income taxpayers who weren?t eligible for the earlier tax pre-bates (these would have to be made by the end of the year)
  • a temporary benefit for those who experience losses on investments
  • a cut in the 27% tax rate to 25% effective next year, rather than the scaled implementation in current law
  • an increase in the threshold where the alternative minimum tax (AMT) kicks in
  • a cut in the top rate on individual capital gains, to 18% from 20% at present, by repealing a five-year holding period. The 10% rate on capital gains paid by low-income taxpayers would be cut to 8%

Next Steps

The measure next goes to the full House of Representatives for further consideration, perhaps as early as next week.

The Democrat-controlled Senate is expected to differ “substantially” from the House version, according to Senate Majority Leader Tom Daschle (D-South Dakota).

Stillwell Pulls Itself Together, Taps New CEO

September 3, 2002 (PLANSPONSOR.com) - Stillwell Financial has tapped a new chief executive officer to take charge of its operations that are newly merged with its flagship Janus Capital Management mutual fund unit.

Mark Whiston, 41, an 11-year Janus veteran, will take the reins December 31 when the combination is completed. Whiston is currently president of retail and institutional services. 

The appointment of Whiston, who has a sales and marketing background, stands in some contrast to Bailey, who came from the investment side of the business, according to published reports.  The move also surprised some Industry watchers, who had been expecting the firm to go outside for new leadership.

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Stilwell, which currently owns about 92% of Janus, has been seeking a CEO for the business since Janus founder Tom Bailey stepped down in July 1 after selling his remaining stake in Janus last year.

Bailey’s departure, first announced in June, came at a rough time for the company, which is struggling with declines in its once-hot funds and an exodus of investors who are cashing out of the money-losing portfolios.

The combined company will shut down its headquarters in Kansas City and move its headquarters to Janus’ hometown of Denver, resulting in the elimination of 130 to 140 jobs, according to Reuters.

Stilwell also owns the Denver-based Berger Financial Group, another fund firm hit hard by the market downturn as its growth-oriented stock funds have fallen.

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