A $26 billion measure (HR 1586), to provide relief to states for emergency funding for teachers, emergency responders and state health insurance, was signed into law on August 10.  To pay for the measure, a number of tax loopholes used by some companies to escape taxes and ship jobs overseas were closed down tight.

The legislation results in the denial of foreign tax credits resulting from covered asset acquisitions.  The measure would also restrict the amount of foreign taxes considered paid under Code Sec. 956 and repeal rules for interest and dividends received from persons meeting the 80-percent foreign business requirements.

President Obama stated, in an address from the Rose Garden, HR 1586 will help states avoid eliminating firefighters and police officers, nurses and other first responders.  The tax loopholes the measure will close would prevent the measure from adding to the budget deficit by discouraging companies from shipping American jobs overseas.

Democrats and Republicans voiced opposing opinions over the new legislation: “The permanent tax increases in this bill will continue to weigh on American job creators long after this latest well of so-called stimulus spending goes dry,” said House GOP Study Committee Chair Tom Price, R-Ga.  House Speaker Nancy Pelosi said the bill would be beneficial to the economy.

“Economists have told us that if this legislation were not passed, and these jobs are not saved, and the budgets of the states are not stabilized, we would go into another deep recession like the one we inherited from the previous administration,” Pelosi said.