Barack Obama’s address to Congress 02/24/09

February 26, 2009
Barack Obama’s address to Congress

While President Barack Obama was addressing Congress he was talking to three sets of different chambers of Congress. Not the House and the Senate but rather the Republicans and the Democrats and the American people.

If the wording of what he said does eventually come true, and I believe parts of it will come true, then the other parts will have profound implications for generations to come. However, if other parts do not come through and the continuation of political differences continue, then our economy will eventually stagnate back to its normal course and take its place in a continuing history of events.

President Nixon proposed an Earned Income Tax Credit in one of his State of the Union addresses. The proposed items had been adopted by Congress and signed into law. However, does anyone realize this was presented by President Nixon in an effort to diminish the disparity between the haves and the have not. Or really should I say to diminish the distance between the racial divide which plagued the nation at that time and going back to the Civil War and to the Declaration of Independence. Social issues still seem to be an overriding attribute of equalization which past presidents have tried to address. Some take a radical approach and some have taken a progressive approach.

Energy is one of the items on Obama’s list of needs. This list was first placed on our national agenda in the 1970’s with the oil embargo and President Nixon’s administration. Congress could not find an equilibrium and still has not been able to find an equilibrium which would bring our country out of economic disadvantage from the rest of the oil producing countries. President Obama puts this in another fashion: ”

“In other words, we have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.”

The finding of new sources of energy should be of a paramount goal for other goals may lead to other less savory short-term goals which only can bring on lesser achievements and lower profits in the long-run. Short-term profits always will remain short-term profits unless the long-term profits are first met.

The Pilgrims suffered for the long-term profit of establishing a settlement where they could worship God as they wanted to. The short-term profit of going south for warmth was not achieved and numerous settler passed away. But yet today their long-term goals are still being strived for as our country continues to worship God in an independent and respectful fashion. The reasoning behind “In God We Trust” becomes stronger as each generation passes the torch. A strong energy independent economy will help in the worshipping of God. Sources of oil in the Gulf and in the upper northern states need to be explored and come to fruitfulness for our continuing independence and for the joy of worshipping God.

God is still in control. From the time China unites with the United States over a common enemy to the United States once again becoming the salt of the earth our energy independence and non-reliance upon other countries would help in transforming the world once again to a vision which would be a full respecter of God and His wishes.

I read in the paper today that North Korea will be testing a rocket which could reach the United States. I believe this will be a uniting factor between the United States and China. The enemy of my enemy is my friend. The small sayings can become true statements in the joining of forces.

“Now is the time to act boldly and wisely…”

When acting boldly and wisely the writers and signers of the Declaration knew that boldness and only boldness would unite the country. A single man helped in that endeavor, Thomas Payne, by writing a pamphlet called “Common Sense”. Is our country past common sense. I dare to say ‘No’. Do we need to act boldly now, ‘Yes’. But reacting wisely is also of importance. Thomas Jefferson was bold in his writing of the original draft of the Declaration of Independence. Others thought it not wise to include the freeing of slaves. The wisdom was thought we would not have a United States but a North and a South. The slave issue finally was arrested in the fighting of the Civil War. In times of unrest our Country has surrounded the independent spirit and the respect of everyone to worship God in their own way. A few people demanding that we respect the earth while not allowing others to respect the earth by drilling to uncovers its riches is a hindrance to our independence and of our founding father’s desire to worship God in their own fashion.

“As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day that would put people back to work and put money in their pockets. Not because I believe in bigger government–I don’t.”

This is a revelation to both sides of the aisle. A democrat not wanting bigger government is like saying one is a Republican. Maybe the Republicans should listen and if this comes true they should adopt President Obama as a Republican. Not just yet though.

“Over the next two years, this plan will save or create 3.5 million jobs.

More than 90% of these jobs will be in the private sector — jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.”

Mr. President, these may be from the private sector as in construction jobs but the money and the reasoning would be for the benefit of the government bureaucracy. Roads and bridges and mass transit are objectives of government. Turbines and solar panels would be the exception only to this. But some of this may become sources of ownership by big government. Please excuse my skepticism but this still sounds like big government. If the government would get out of the way then private citizens could build their own solar panels on their property and take the funds out of their IRA or ROTH/IRA and without a penalty or taxing the retirement fund then true individuals could build their own wealth by eliminating the need for government intervention. Government has a few roles but the creation of jobs can never be the result of government except when they get out of the way so the citizens can create.

“Because of this plan, there are teachers who can now keep their jobs and educate our kids.”

Building roads and bridges, constructing wind turbines and solar panels; laying broadband and expanding mass transit does not create jobs for teachers and educate our kids. Sorry but the logic does not flow.

“Because of this plan, 95% of the working households in America will receive a tax cut…” It would seem to me if our real estate taxes were cut to the level in which the value of the house is then a bigger tax cut would be coming to 100% of the working households in America. The smaller the government the bigger the tax cut.

Education has always been of concern to Thomas Jefferson. He even had one slave cook for him in a French Cooking style for five years and then let the slave go. I never have heard if the former slave opened up a restaurant in Washington, D.C. or not. Sometimes holding onto an asset is for the betterment of one. Letting it go could be for the benefit of many. Ditto with Oil. Ditto with letting the citizens develop their own source of energy independence. The collection of the many can be for the benefit of the whole and stronger than the whole also.

Government by mandate is not the solution to our economy woes but in reality the letting go of government will be the releasing of our independence. Government pressure and trying to be helpful is what got us into this mess in the first place. But placing this issue as a national project is what might save us. Stop right there. If government got us into this mess then government should get out of the way so the independent thinking can voice victory and victory should not be that of the government.

“I have appointed a proven and aggressive Inspector General to ferret out any and all cases of waste and fraud.” This is merely an endeavor to express your concern of resolving big government while really not proving your case. Only if waste and fraud are truly eliminated will anyone be able to respect this statement. Past Presidents have stood fast to this principle but only one has achieved this as a goal. Instead of cleaning up the government I say that not the yearly debt to be reduced in half by four years but rather the debt of the United States needs to be nullified in four years period of time. Being independent and the size of government being small can accomplish this feat. With $700 billion in oil imports costing us each year the multiplier of current money flow being 12X if independence of energy can be achieved then the complete budget deficit can be erased.

“…we clean up the credit crisis…”

If I see legislation which restricts the usage of credit card debt which must be paid within three months then I will believe this is a solution to the credit crisis. Forgiveness of all credit card debt longer than six months would greatly increase the capacity of independence and reduce high interest rates. The credit card industry has severely weakened our financial system and needs a reminder of constraint. Reducing the need for and access to credit card indebtedness is the only way to”…swiftly and aggressively to break this destructive cycle, restore confidence, and restart lending.”

If you are really trying to “reform our out-dated regulatory system” then you will indeed need to adopt a tough credit card policy which would bring a “…tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes shortcuts and abuse.”

“The only way this century will be another American century is if we confront at least the price of our dependence on oil and the high cost of health care: the schools that aren’t preparing our children and the mountain of debt they stand to inherit. That is our responsibility.” …. “I see it as a vision for America – as a blueprint for our future.”

“I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.”

But I would rather say that the problem is with government and the solution is really instructing the spirit of independence to squash the lack of enthusiasm and embrace the need for independence.

Again, government has laid the foundation for independence through the forming of IRA and ROTH/IRAs. Now is the time for government to allow the independent spirit of being able to use these funds for solar cells and wind power generation in ones own home. No tax penalty and no income tax upon withdrawal. Take the roadblocks to financial success out of the independent thinkers. The collection of IRAs and ROTH/IRAs is greater than the communistic collective governments of China’s government.

A recent wave power project for the Neah Bay Tribe in the Northwest corner of the State of Washington by a Canadian firm in Vancouver, B.C. was recently discontinued and another project picked up for construction in Ireland instead was started. Was this because big government was the solution or because the company did not know if they would be paid. Washington State is in financially dyre straight and the company also discontinued a like project in California in favor of Ireland. Noting that a 10 miles by 10 mile area in the ocean can produce a great amount of electric energy for the state. Also, on the Washington coast south of Neah Bay is where no human lives for 23 miles. Neah Bay project was projected to create electricity for 150 homes. A rather small project but a start for the state.

All sources of energy need to be explored. Did the Spanish explorers stop at the east coast.

Putting a “market-based cap on carbon pollution” will only drive our existing infrastructure into a tailspin. This is like saying to depression era unemployed citizens that they need to pay a higher tax so the workers can get jobs.

There are three things which economists say create economies.

1) Land

2) Labor

3) Capital

But I say there is a different method to economies. There are three things which can create a new economy.

1) Farming

2) Extracting Minerals

and the last one is

3) Innovation.

In no way is government in this mix. If government wants to be the one contributing capital then the solution is still there. But the locomotive was an innovation. The other five items were needed. Our country expanded. When the innovation of the auto assembly line was constructed by Henry Ford the others were used and increased. With President Eisenhower’s use of innovation and the highway system the other forces came in usage and created wealth. A more efficient farming system was one of the major benefactors.

But if the extracting of oil is not continued but rather punished then the objective of developing “our recovery plan, we will double this nation’s supply of renewable energy in the next three years” then in fact this could stall this three year plan as well. To decrease an existing innovation with a tax is essentially saying to the economy to slow-down.

Eisenhower did not eliminate all new or existing roads.

The train system did not replace the road.

The assembly line did not mandate all older systems to terminate.

If something is better than a prior technology then the prior technology will soon have a modified usage. Taxing it was not done in the past nor was it necessary or useful. The free market took over. Taxing a drill, baby, drill philosophy will not create the oppressors objectives of immediately depressing the older technology but will suppress the economy so the funds for the new segment will take longer and thus require the continuation of the older system.

If you are trying to not believe in “Big Government” but you “make clean, renewable energy the profitable kind of energy” then you are in-fact creating “Big-Government”. Big Government is the problem and not the solution.

Asking “Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.” If Congress tries to create a market-based cap then this is not a market-based cap. It is a government-based cap. The devil is in the interpretation. Market vs. Government. If government invests “fifteen billion dollars a year to develop technologies like wind power and solar power, advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America” then the government does not need to create a market-based cap. The innovation will create this and the market would be the solution. The auto industry will then by itself be required to be self “retooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it.”

“…We must also address the crushing cost of health care.”


I am not seeing any new solutions for or from government here. Neither do I expect a real solution from government here. I think that only a natural solution is possible. The adherence to God’s principles can truly increase the need and longevity of life. The suppression via drugs which mask symptoms is at best artificial. Creative yes, but artificial.

“Promise of education in America.”

“Right now, three-quarters of the fastest-growing occupations require more than a high school diploma.” The definition of Labor from above needs to include education. If an adequate labor force is not available then the efficient usage of capital will not be needed. A competitive cradle to college objective has already been the prior government objective and a new system of education needs to be explored. Trying and throwing funds at the old style or old system will not improve the system. But if the system has been tried then by all means “expand our commitment to charter schools”.

I think about the innovation of the pencil when it comes to schools. The lead attachment was used and then a separate eraser was picked up and used if needed. Well, our education system does to have an eraser attached to it so the immediate extra steps of picking up the eraser do need to be exercised.

The education system needs to adopt the non-public system as an attachment to the public school system. With innovation some students parents could actually pay for the cost of the salary of a teacher. But in the non-public school system they can charge a higher price and get highly skilled professional teachers. To see a teacher without a doctoral degree in some private schools is rare. Only the exceptional masters degree teachers could apply. The eraser part of this would be the invitation of one or two students from the main school populace to be invited for one semester into the class of 8 or 10 students for a recognition of other accomplishments and achievements which the parents have voted in. This would instill a higher achievement level in the other students to achieve so they possibly could be selected as fellow high achiever students. Those parents willing to expend extra funds for the professor teacher would be rewarded with a higher capacity of learning available in a public school setting and the school system would get a better general student. The higher cost of private education would be mitigated modestly.

“And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.” I thought this was tried in the Bush administration era. An immediate introduction of this and not even out of the batters box or the racing gate.

The military is still the backbone of all types and styles of economies. The foundation blocks of Land, Labor and Capital and the building blocks of Farming, Extracting Minerals and Innovation could not exist without any pre-existing strength from a well-qualified military force. The defending of the strength of these foundation blocks begins with the steady hand of the military.

A child who can utter the words of “we are not quitters” with conviction and steadfastness is showing off her strength as a David, as a Ruth as a Daniel or as a Mary. Her conviction should motivate the rest of us.



Recovery and Reinvestment Act of 2009

February 20, 2009

As you all might know by now the Act is stuffed with little goodies.  Some good and some bad.  Particular target industries such as the real estate market are included.  Education HOPE Credit is changed to the American Opportunity Credit and increased to $2500 and available for a four year period after high school.

First-time homebuyers (those who have not had a home in the last three years can now get a $8,000 credit if a house is purchased after 01/01/09 otherwise the old rules stay.  Income limitations do apply the same as with the old law. 

The big one is the Business capital gains relief.  A small business owner can exclude up to 75% of the capital gains on the sale of equipment if he/she has owned the business for the last five years.  My suggestion is get rid of the old equipment and buy some new equipment which would be more efficient.   Some businesses may not have to pay capital gains anyways in they are in the 15% tax bracket for personal income anyways.  Warning:  Will still have to claim as ordinary income the recapture of depreciation.  Recapture is not a capital gain amount but still carries on Form 4797 as an ordinary income amount.

I note the complexity of the bill because a NewHire Tax Credit is given for unemployed vetereans and “disconnected youth”.  The disconnected youth ideally should be going to college but with the new American Opportunity credit available only in the first four years after high school the disconnected youth will be in affect “disenfranchised” from the American Opportunity Credit because of the need to become employed.  The credit to the employer is equivalent to a 40 percent credit for th efirst $6,000 of wages paid to these two groups.

Below please find one of my tax advisors who is independent who I go to for continueing education for my Enrolled Agent designation.  Joy Wilen from Vancouver is a great speaker and extremely interesting to have as a speaker for the need of being and getting continueing education requirements satisfied by the Internal Revenue Service.


Following are highlights of the individual tax changes in the American Recovery and Reinvestment Act of 2009 (the Recovery Act) signed into law by the President on Feb. 17, 2009.


Making Work Pay Credit

New law

The Recovery Act provides eligible individuals with a refundable income tax credit for tax years beginning in 2009 and 2010. Code Sec. 36A , as added by Act Sec. 1001(a) 

The credit is the lesser of (1) 6.2% of an individual’s earned income or (2) $400 ($800 for a joint return). Code Sec. 36A(a) 

For these purposes, the earned income definition is the same as for the earned income tax credit with two modifications:

(a) it does not include net earnings from self-employment which are not taken into account in computing taxable income; and

(b) it includes combat pay excluded from gross income under Code Sec. 112 .

Code Sec. 36A(d)(2)The credit is phased out at a rate of 2% of the eligible individual’s modified AGI above $75,000 ($150,000 for a joint return). Code Sec. 36A(b)


The credit is reduced by any payment received by the taxpayer under Recovery Act Sec. 2201 or any credit allowed to the taxpayer under Recovery Act Sec. 2202 (these are recovery payments under the Veterans Administration, Railroad Retirement Board, and the Social Security Administration and credit for certain government workers, as discussed below). Code Sec. 36A(c) The failure to reduce the making work pay credit by the amount of such payments or credit, and the omission of the correct TIN (see below), are clerical errors. Code Sec. 6213(g)(2)(N) This allows IRS to assess any tax, resulting from such failure or omission without the requirement to send the taxpayer a notice of deficiency allowing the taxpayer the right to file a petition with the Tax Court. (Conference Agreement) An eligible individual is any individual other than: (1) a nonresident alien; (2) an individual with respect to whom another may claim a dependency deduction for a tax year beginning in a calendar year in which the eligible individual’s tax year begins; and (3) an estate or trust. Code Sec. 36A(d)(1)(A) An individual is not eligible if he does not include his social security number on the return. For joint filers, this requirement is met if the social security number of one of the spouses is included on the return. Code Sec. 36A(d)(1)(B) Any credit or refund allowed or made to an individual under this provision is not taken into account as income and is not taken into account as resources for the month of receipt and the following two months for purposes of determining eligibility of the individual or any other individual for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds. Act Sec. 1001(c)It is anticipated that taxpayers’ reduced tax liability under the provision will be expeditiously implemented through revised income tax withholding schedules produced by IRS. These revised schedules should be designed to reduce taxpayers’ income tax withheld for each remaining pay period in the remainder of 2009 by an amount equal to the amount that withholding would have been reduced had the provision been reflected in the income tax withholding schedules for the entire tax year. Conference Report 

Economic Recovery Payment to Recipients of Social Security, SSI, Railroad Retirement and Veterans Disability Compensation Benefits

The Recovery Act provides a one-time payment of $250 to retirees, disabled individuals and SSI recipients receiving benefits from the Social Security Administration, Railroad Retirement beneficiaries, and disabled veterans receiving benefits from the U.S. Department of Veterans Affairs. To be entitled to the $250 payment, the individual must have been eligible for one of the four benefit programs for any month during the three-month period ending with the month which ends before the month that includes the Feb. 17, 2009 date of enactment. Thus, to be entitled to the payment, the individual must have been so eligible during November or December of 2008 or January of 2009. Act Sec. 2201The one-time payment is a reduction to any allowable Making Work Pay credit (see above). Treasury must begin disbursing economic recovery payments as soon as practicable, but no later than June 17, 2009 (120 days after date of enactment).



Refundable Credit for Certain Federal and State Pensioners

Effective Feb. 17, 2009, the Recovery Act provide a one-time refundable tax credit of $250 in 2009 to certain government retirees who are not eligible for Social Security benefits. This one-time credit is a reduction to any allowable Making Work Pay credit (see above). Act Section 2202

Increase in Earned Income Tax Credit

New law

The Recovery Act increases the EITC credit percentage for families with three or more qualifying children to 45% for 2009 and 2010. Code Sec. 32(b)(3) , as amended by Act Sec. 1002(a)For example, in 2009, taxpayers with three or more qualifying children may claim a credit of 45% of earnings up to $12,570, resulting in a maximum credit of $5,656.50.

The Recovery Act also increases the threshold phaseout amounts for married couples filing joint returns to $5,000 above the threshold phaseout amounts for singles, surviving spouses, and heads of households) for 2009 and 2010 (subject to a further increase in 2010 for inflation). Code Sec. 32(b)(3)

Refundable Child Credit Eased

Currently, a taxpayer receives $1,000 tax credit for each qualifying child under the age of 17. To the extent the child credit exceeds the taxpayer’s tax liability, the taxpayer is eligible for a refundable credit (the additional child tax credit) equal to 15% of earned income in excess of a threshold dollar amount (the earned income formula). The threshold dollar amount was to have been $12,050 for 2008, as indexed for inflation. However, for the 2008 tax year, the Emergency Economic Stabilization Act modifies the earned income formula for the determination of the refundable child credit to apply to 15% of earned income in excess of $8,500. For 2009, the earned income formula for the determination of the refundable child credit is 15% of earned income in excess of $12,550 (as indexed for inflation).


The change to $8,500 for 2008 is pro-taxpayer in that in can result in a larger credit than could have been the case had the figure been $12,050.

Families with three or more children may determine the additional child tax credit using the “alternative formula,” if this results in a larger credit than determined under the earned income formula. Under the alternative formula, the additional child tax credit equals the amount by which the taxpayer’s social security taxes exceed the taxpayer’s earned income credit.


New law

The Recovery Act modifies the earned income formula for the determination of the refundable child credit to apply to 15% of earned income in excess of $3,000 for tax years beginning in 2009 and 2010. Code Sec. 24(d)(4) , as amended by Act Sec. 1003(a)


New American Opportunity Tax Credit

New law

The Recovery Act modifies the Hope credit for tax years beginning in 2009 or 2010. Code Sec. 25A(i) , as amended by Act Sec. 1004(a)The modified credit is referred to as the American opportunity tax credit. The credit is up to $2,500 per eligible student per year for qualified tuition and related expenses paid for each of the first four years of the student’s post-secondary education in a degree or certificate program. The modified credit rate is 100% on the first $2,000 of qualified tuition and related expenses, and 25% on the next $2,000 of qualified tuition and related expenses. Code Sec. 25A(i)(1) The definition of qualified tuition and related expenses is expanded to include course materials. Code Sec. 25A(i)(3) The credit is available with respect to an individual student for four years, provided he has not completed the first four years of post-secondary education before the beginning of the fourth tax year. Code Sec. 25A(i)(2) The credit is phased out ratably for taxpayers with modified AGI between $80,000 and $90,000 ($160,000 and $180,000 for joint filers). Code Sec. 25A(i)(4) The credit may be claimed against AMT. Code Sec. 25A(i)(5) Subject to an exception, forty percent of a taxpayer’s otherwise allowable credit is refundable. No portion of the credit is refundable if the taxpayer claiming the credit is a child subject to the kiddie tax under Code Sec. 1(g) . Code Sec. 25A(i)(6) The Recovery Act of 2009 requires IRS to conduct two studies and submit a report to Congress on their results not later than Feb. 17, 2010: a study on how to coordinate the Hope and Lifetime Learning credits with the Pell grant program; and a study on requiring students to perform community service as a condition of taking their tuition and related expenses into account for purposes of the Hope and Lifetime Learning credits. Act Sec. 1004(f)


Increased Transit and Vanpool Transportation Fringe Benefits

An employee can exclude qualified transportation fringe benefits provided by an employer from his gross income and from his wages for payroll tax purposes. These include parking, transit passes, vanpool benefits, and qualified bicycle commuting reimbursements. For 2009, up to $230 per month of parking benefits and up to $120 per month of transit and vanpool benefits (as indexed for inflation) are excludable from income.

New law

For months beginning on Mar. 1, 2009 and before Jan. 1, 2011, the Recovery Act increases the monthly exclusion for employer-provided transit and vanpool benefits to the same level as the exclusion for employer-provided parking. Code Sec. 132(f)(2) , as amended by Act Sec. 1151

Computers as Education Expenses under 529 Plans

A person can make nondeductible cash contributions to a qualified tuition program (QTP, or 529 plan) on behalf of a designated beneficiary. The earnings on the contributions build up tax-free and distributions from a QTP are excludable to the extent used to pay for qualified higher education expenses. A QTP is a tax-exempt program established and maintained by a state (including a state agency or instrumentality), or one or more eligible educational institutions (including private ones) under which a taxpayer may: (1) buy tuition credits or certificates on behalf of a designated beneficiary which entitle the beneficiary to a waiver or payment of qualified higher education expenses—i.e., a prepaid educational services account, or (2) make contributions to an account set up to meet the designated beneficiary’s qualified higher education expenses—i.e., an educational savings account. This option is available only for state (or state agency or instrumentality) programs.

Qualified higher education expenses for QTP purposes are: (a) tuition, fees, books, supplies, equipment required for the enrollment or attendance of a designated beneficiary at an eligible educational institution, and expenses for special needs services; and (b) room and board costs (subject to a limit) for students who are at least half-time.

New law

Under the Recovery Act, expenses paid or incurred in 2009 or 2010 for the purchase of any computer technology or equipment or Internet access or related services qualify as qualified education expenses under QTPs if such technology, equipment, or services are to be used by the QTP beneficiary or his family during any of the years the beneficiary is enrolled at an eligible educational institution. Code Sec. 529(e)(3)(A)(iii) , as amended by Act Sec. 1005(a)Expenses for computer software designed for sports, games or hobbies do not qualify under Code Sec. 529(e)(3)(A)(iii) unless the software is predominantly educational in nature. Code Sec. 529(e)(3)(A)(iii)  

First-time Homebuyer Credit Eased

For qualifying purchases of principal residences in the U.S. after Apr. 8, 2008 and before July 1, 2009, eligible first-time homebuyers may claim a refundable tax credit equal to the lesser of 10% of the purchase price of a principal residence or $7,500 ($3,750 for married individuals filing separately).

A taxpayer is considered a first-time homebuyer if he (or spouse, if married) had no present ownership interest in a principal residence in the U.S. during the 3-year period before the purchase of the home to which the credit applies.


Because only prior ownership in a principal residence is considered, it’s possible for a taxpayer who already owns a vacation home to claim the new credit, if he otherwise qualifies. For example, a taxpayer whose principal residence for at least three years has been a rental apartment in the city, and who owns a seaside home, could claim the credit for the purchase of a new principal residence if his modified AGI doesn’t exceed the phaseout levels discussed below.

Eligible first-time homebuyers who purchase a principal residence after Dec. 31, 2008, and before July 1, 2009, may elect to treat the purchase as made on Dec. 31, 2008.

The first-time homebuyer credit phases out for individual taxpayers with modified AGI between $75,000 and $95,000 ($150,000-$170,000 for joint filers) for the year of purchase.

The credit for new homebuyers is recaptured ratably over fifteen years, with no interest charge, beginning with the second tax year after the tax year in which the home is purchased. For each tax year of the 15-year recapture period, the credit is recaptured as an additional income tax amount equal to 6 2/3% of the amount of the credit. This repayment obligation may be accelerated or forgiven under certain exceptions.


In other words, the credit for new homebuyers is the equivalent of a long-term interest-free loan from the government.



New law

The Recovery Act extends the credit so that it applies to purchases before Dec. 1, 2009. Code Sec. 36(h) , as amended by Act Sec. 1006(a)In addition, it waives the recapture of the credit for qualifying home purchases after Dec. 31, 2008. This waiver of recapture applies without regard to whether the taxpayer elects to treat the purchase in 2009 as occurring on Dec. 31, 2008. If the taxpayer disposes of the home or the home otherwise ceases to be the principal residence of the taxpayer within 36 months from the date of purchase, the pre-Recovery Act 2009 rules for recapture of the credit apply. Code Sec. 36(f)(4)(D) The Recovery Act also increases the maximum homebuyer credit to $8,000. Code Sec. 36(b)The Recovery Act also provides that no D.C. homebuyer credit is allowed to any taxpayer with respect to a 2009 residence purchase if a credit is first-time homebuyer credit is allowable to the taxpayer under Code Sec. 36 . Code Sec. 1400C(e)(4)


Partial Exclusion of Unemployment Compensation

An individual must include in gross income any unemployment compensation benefits received under the laws of the U.S. or any State.

New law

Under the Recovery Act, up to $2,400 of unemployment compensation benefits received in 2009 are excluded from gross income by the recipient. Code Sec. 85(c) , as amended by Act Sec. 1007

New Temporary Deduction for Sales and Excise Taxes on Car Purchases

Taxpayers who itemize deductions may elect to deduct state and local general sales and use taxes instead of state and local income taxes, for tax years beginning before 2010.

New law

For purchases on or after Feb. 17, 2009 and before Jan. 1, 2010, the Recovery Act provides a deduction for qualified motor vehicle taxes. It expands the definition of taxes allowed as a deduction to include qualified motor vehicle taxes paid or accrued within the tax year. Code Sec. 164(b)(6) , as amended by Act Sec. 1008 The deduction generally is allowed to itemizers. It also is allowed to those claiming the standard deduction. Code Sec. 63(c)(1)(E) Qualified motor vehicle taxes are State or local sales or excise taxes imposed on the purchase of a qualified motor vehicle. Code Sec. 164(b)(6)(A) Only taxes on that portion of the cost of a qualified motor vehicle not exceeding $49,500 ($24,750 for a married person filing separately) may be deducted. Code Sec. 164(b)(6)(B) The amount of sales or excise taxes that may be treated as qualified motor vehicle taxes is phased out ratably for a taxpayer with modified AGI between $125,000 and $135,00 ($250,000 and $260,000 on a joint return). Code Sec. 164(b)(6)(C) A qualified motor vehicle is a (1) passenger automobile, light truck or motorcycle the gross vehicle rating of which is not more than 8,500 pounds and (2) a motor home the original use of which commences with the taxpayer. Code Sec. 164(b)(6)(D)

The deduction for qualified motor vehicle taxes is not available to a taxpayer who elects to deduct state and local sales and use taxes in lieu of income taxes as an itemized deduction. Code Sec. 164(b)(6)(F) The deduction for qualified motor vehicle taxes is allowed in computing the AMT. Code Sec. 56(b)(1)(E)

Limited-Time-Only Subsidy for COBRA Continuation Coverage of Unemployed Workers

The Recovery Act of 2009 provides a 65% subsidy for COBRA continuation premiums for up to 9 months for workers who have been involuntarily terminated, and for their families. This subsidy also applies to health care continuation coverage if required by states for small employers. To qualify for premium assistance, a worker must be involuntarily terminated between Sept. 1, 2008 and Dec. 31, 2009. The subsidy terminates upon offer of any new employer-sponsored health care coverage or Medicare eligibility. Workers who were involuntarily terminated between Sept. 1, 2008 and Feb. 17, 2009, but failed to initially elect COBRA because it was unaffordable, must be given an additional 60 days to elect COBRA and receive the subsidy. Participants must attest that their same-year income will not exceed $125,000 for individuals and $250,000 for families. Act Sec. 3001The subsidy is not taxable. Code Sec. 139C , as added by Act Sec. 3001









Following are highlights of the alternative minimum tax (AMT) tax changes in the American Recovery and Reinvestment Act of 2009 (the Recovery Act) signed into law by the President on Feb. 17, 2009.

Boosted AMT Exemption Amounts for 2009

New law

For tax years beginning in 2009, the Recovery Act increases the AMT exemption amounts to:

… $46,700 (up from $46,200 in 2008) for unmarried individuals;

… $70,950 (up from $69,950 in 2008) for married couples filing a joint return and surviving spouses; ( Code Sec. 55(d)(1) , as amended by Act Sec. 1012(a))

… $35,475 (up from $34,975 in 2008) for married individuals filing separate returns.


The Recovery Act’s increases in the AMT exemption amounts are a temporary fix only. Absent Congressional action, the 2010 AMT exemption amounts for individuals will revert to the levels they were at for 2000. The one-year AMT “patch” has the effect of postponing for one year the reductions in those amounts that, under pre-Recovery Act law, were scheduled to go into effect for tax years beginning after 2008. Thus, these reductions are now scheduled to go into effect for tax years beginning after 2009, i.e., for 2010 and later years.

Personal Nonrefundable Credits May Offset AMT and Regular Tax for 2009

Under pre-Recovery Act law, for tax years beginning after 2008, the nonrefundable personal tax credits (other than the adoption credit, the child tax credit, the low-income saver’s credit, the residential energy efficient property, and the non-depreciable property portion of the plug-in electric car credit) were allowed only to the extent that their aggregate amount didn’t exceed the excess of: (a) the taxpayer’s regular tax liability, over (b) his tentative minimum tax, determined without regard to the alternative minimum tax foreign tax credit.


Thus, under the pre-Recovery Act provisions, the nonrefundable personal credits generally (except for the five credits noted above) couldn’t offset AMT. The AMT could also indirectly limit a taxpayer’s nonrefundable personal tax credits even in situations where the taxpayer wasn’t liable for the AMT.

New law

For tax years beginning in 2009, the Recovery Act provides that the aggregate amount of nonrefundable personal credits can’t exceed the sum of: (1) the taxpayer’s regular tax liability for the tax year, reduced by the foreign tax credit, and (2) the AMT. Code Sec. 26(a)(2) , as amended by Act Sec. 1011(a)(1)


Alternative Motor Vehicle Credit Allowed Against AMT

For tax years beginning after Dec. 31, 2008, the Recovery Act provides that the alternative motor vehicle credit is a personal credit allowed against the AMT. Specifically, the alternative motor vehicle credit for any tax year (determined after the application of the rules that treat the portion of the alternative motor vehicle credit attributable to depreciable property as a general business credit) is treated as a personal credit for the tax year. Code Sec. 30B(g)(2)(A) , as amended by Act Sec. 1144(a)

Repeal of AMT Limits on Tax Exempt Bonds Issued in 2009 and 2010

New law

For interest on bonds issued after Dec. 31, 2008 and before Jan. 1, 2011, the Recovery Act provides that tax-exempt interest on private activity bonds issued isn’t an item of tax preference for purposes of the alternative minimum tax (AMT). Code Sec. 57(a)(5)(C)(vi) , as amended by Act Sec. 1503(a)


Nonbusiness Homeowners Energy Credit Extended to 2010 and Modifie

dUnder pre-Recovery Act law, for property placed in service in 2009, a taxpayer could claim a lifetime nonrefundable credit of up to $500 for making qualifying energy saving improvements to his home, but only $200 of this credit amount could be for qualifying window expenditures. The expenses had to be made on or in connection with a dwelling unit located in the U.S., owned and used by the taxpayer as his principal residence, and originally placed in service by the taxpayer. The credit per improvement was:

(1) 10% of the cost of energy efficient building envelope components which meet criteria established by the 2000 International Energy Conservation Code. These consist of: insulation materials or systems that reduce heat loss/gain; exterior windows (including skylights); exterior doors; and certain metal roofs with pigmented coatings or (where placed in service after Oct. 3, 2008) asphalt roofs with cooling granules (which meet the Energy Star requirements) designed to reduce heat gain. The components must be expected to last for at least five years.

(2) Residential energy property expenses (including labor costs) for onsite preparation, assembly, or original installation which meet specific standards in an amount up to:

… $300 for the cost of energy-efficient building property (electric heat pump water heater, electric heat pump; central air conditioner; natural gas, propane or oil water heater; or a stove burning biomass fuel to heat or provide hot water to a taxpayer’s residence in the U.S.) that meets specific energy efficiency standards).

… $150 for a natural gas, propane, or oil furnace or hot water boiler.

… $50 for an advanced main air circulating fan.

Under pre-Recovery Act law, an individual’s expenditures from subsidized energy financing—i.e., financing provided under a Federal, State, or local program with a principal purpose of providing subsidized financing for projects designed to conserve or produce energy—wasn’t taken into account for purposes of the credit.

New law

The Recovery Act extends the Code Sec. 25C nonbusiness energy tax credit for one year through Dec. 31, 2010. Code Sec. 25C(g)(2) , as amended by Act Sec. 1121(e)For tax years beginning after Dec. 31, 2008, for property placed in service before Jan. 1, 2011, the Recovery Act raises the 10% credit rate to 30%. All energy property otherwise eligible for the $50, $100, or $150 credits is instead eligible for a 30% credit on expenditures for the property. Code Sec. 25C(a) In addition, the $500 lifetime cap (and the $200 lifetime cap for windows) is eliminated and replaced with an aggregate cap of $1,500 for property placed in service after Dec. 31, 2008 and before Jan. 1, 2011. Code Sec. 25C(b)

Effective on Feb. 17, 2009, there are revised standards for energy efficient building property (electric heat pumps, central air conditioners and water heaters), oil furnaces and hot water boilers, and exterior windows, doors, and skylights. For tax years beginning after 2008, a revised standard also applies for stoves using biomass fuels. Code Sec. 25C(c) , Code Sec. 25C(d) For tax years beginning after Dec. 31, 2008, the limitation on subsidized energy financing is also eliminated. Code Sec. 25C(e)(1) , as amended by Act Sec. 1103(b)(2)



Cap on Residential Energy Efficient Property Credit Eliminated

For property placed in service before 2017, an individual is allowed a 30% credit for the purchase of residential energy efficient property, such as qualified solar energy property (i.e., property that uses solar power to generate electricity in a home); and qualified fuel cell property, up to a maximum credit of $500 for each 0.5 kilowatt of capacity. Under pre-Recovery Act law, the credit was also allowed for:

… qualified solar water heating property, up to a maximum credit of $2,000;

… qualified small wind energy property, up to $500 for each half kilowatt of capacity (not to exceed $4,000); and

… qualified geothermal heat pump property, up to $2,000.

Under pre-Recovery Act law, rules covered the treatment of joint occupants in allocating the credit taking these maximum limits into account for purposes of residential energy efficient property credit.

Under pre-Recovery Act law, an individual’s expenditures from subsidized energy financing—i.e., financing provided under a Federal, State, or local program with a principal purpose of providing subsidized financing for projects designed to conserve or produce energy—wasn’t taken into account for purposes of the credit.

New law

For tax years beginning after Dec. 31, 2008, the Recovery Act eliminates the credit caps for solar hot water, geothermal, and wind property. Code Sec. 25D(b) , as amended by Act Sec. 1122 The rules covered the treatment of joint occupants are revised to only apply to qualified fuel cell property. ( Code Sec. 25D(e)(4) ) For tax years beginning after Dec. 31, 2008, the limitation on subsidized energy financing is also eliminated. Code Sec. 25D(e) , as amended by Act Sec. 1103(b)














Additional 50% First-Year Depreciation OK’d for Most Types of New Depreciable Property Placed in Service in 2009

New law

For property placed in service after Dec. 31, 2008, in tax years ending after that date, the Recovery Act provides an additional depreciation deduction in the placed-in-service year equal to 50% of the adjusted basis of “qualified property.” Code Sec. 168(k)(1) , as amended by Act Sec. 1201(a)The property generally must be acquired before Jan. 1, 2010 (before Jan. 1, 2011 for certain longer-lived property).

First-Year Depreciation Dollar Cap for New Passenger Autos Placed in Service in 2009 Raised by $8,000

Retroactively effective for vehicles bought and placed in service after 2008, the Recovery Act increases by $8,000 the first-year depreciation dollar limit for a passenger auto that is “qualified property” meeting the original use and acquisition and placed-in-service requirements. Code Sec. 168(k)(2)(F)(i)


Recovery Act Boosts Code Sec. 179 expensing for 2009

For tax years beginning in 2009, the Recovery Act increases the expensing limit to $250,000 and the investment ceiling limit to $800,000. The $250,000 and $800,000 amounts are not indexed for inflation. Code Sec. 179(b)(7) , as amended by Act Sec. 1202

Small Businesses May Elect Longer NOL Carryback Period

New law

For NOLs arising in tax years ending after Dec. 31, 2007, the Recovery Act permits small businesses to elect to increase the NOL carryback period for an applicable 2008 NOL (the “applicable NOL”) from 2 years to any whole number of years which is more than 2 and less than 6. Code Sec. 172(b)(1)(H) , as amended by Act Sec. 1211(a)A small business for this purpose is defined as a corporation or partnership that meets the gross receipts test of Code Sec. 448(c) (applied by substituting $15 million for $5 million) for the tax year in which the loss arose, or a sole proprietorship that would meet that test if the proprietorship were a corporation. This means any trade or business (including one conducted in or through a corporation, partnership, or sole proprietorship) whose average annual gross receipts (under Code Sec. 448(c) , as modified) are $15 million or less.

Reduced Estimated Tax Burden in 2009 for Individuals With Small Businesses

New law

Effective on Feb. 17, 2009, the Recovery Act provides that notwithstanding Code Sec. 6654(d)(1)(C) , for any tax year beginning in 2009, in computing the amount of the required annual installments of estimated income tax of any qualified individual, “required annual payment” means the lesser of (1) 90% of the tax shown on the return for the tax year, or (2) 90% of the tax shown on the return of the individual for the preceding tax year. Code Sec. 6654(d)(1)(D) , as amended by Act Sec. 1212; Committee ReportA qualified individual means any individual if the AGI on the tax return for the preceding tax year is less than $500,000 ($250,000 if married filing separately) and the individual certifies that at least 50% of the gross income shown on the return for the preceding tax year was income from a small trade or business. For estates and trusts, AGI is determined under Code Sec. 67(e) . A small trade or business is one that employed no more than 500 persons, on average, during the calendar year ending in or with the preceding tax year. Code Sec. 6654(d)(1)(D)(iii)










HB 2133 – Accumulated sick leave for volunteer work

February 16, 2009
HB 2133 – Accumulated sick leave for volunteer work

This bill in its conceptualization seems to be of a positive good-hearted nature. But. This is exactly the opposite of what the employee and the State need for achieving overall personal and state goals.

The purpose of accumulating and even of having sick leave is to be able to continue with the payment of bills if and ever if an accident or a catastrophic illness occurs. Twenty-two days is but only a little bit over one month of accumulation of sick pay. For all purposes this is not enough if a serious illness does occur.

This bill will create ill-will and disillusionment on the part of the government employee. “I helped out during my communities mishappenings and now that I am sick no one else is helping me” syndrome. The world, yes, is cruel and benevolence is noteworthy.

The objective of sick pay is to be accumulated while one is sick and not having money come in because of the reliance upon a continuation of cash flow. Long-term care insurance which would take over in about three months or six months is taken out to guard against the real catastrophies of life. There is no sense in having this catastophe compounded by making the employee suffer financially for five months period of time rather than a shorter period of time.

Ideally the accumulation of sick leave up to the point where the long-term care insurance kicks in is the primary objective of sick pay.

Under current federal law a retiring individual can specify that remaining sick leave be used to pay for health insurance or to be paid out in a lump sum. This lump sum in cash would obviously be taxable. The accumulation of one of the major costs of retirement for future years benefits would greatly enhance the senior citizens prospects of surviving in a more comfortable fashion rather than being paid for the current acts of kindness which would have been better served as future income rather than meeting present income needs.

In no way is this bill in the benefit of the employee overall and in no way is this bill in the best interest of the community and in no way is this bill in the best interest of the greater State of Washington.

This bill also violates the entire premise of sound financial planning for the retirement years which would be ahead.




HB 1100 – No petroleum exploration on coastal waters

February 9, 2009
HB 1100 – no petroleum exploration on coastal waters or inlets.

Relating to protecting the natural marine ecosystem from the potential risks of petroleum extraction.

Who is running scared here. Am looking at the sponsors list and noticing very few signators.

The bill title mentions “potential risk”. No real assessment of potential risks has been addressed in this bill. The potential risk portion is just being assumed without any scientific verification or acknowledgement of studies of any kind let alone scientific studies. Scientific studies by federal law need to address the needs of humans in a study also. No addressing of human needs in this bill are addressed.

The State is $6 Billion or possibly $8 Billion in debt. The simple task of exploring for natural gas or for oil or petroleum of some type would be a boom for the state. The simple exploration would also help in disenfranchising coastal waters and coastal Indian Tribes as well. The Pacific Waters off of the coast or violant and churning. The U.S. EPA came to a conclusion in a bay in Alaska that the need to a waste and sewage disposal system of a man-made variety was unnecessary due to the harsh and constant wave action on a bay in Alaska. A former co-worker who was the head of the EPA in the Pacific Northwest told me this story about 15 years ago. The threat of a “potential risk” of oil pollution may be zero in some part of the coastal areas of Washington State. South of the Macah Indian Tribe for about 22 miles no human dwelling exists. The potential risk here may be zero also. No humans travel by so is there a need to secure seabeds adn shorelines. The “fragile” area may in-fact be violant.

A few days ago the Macah Indian Tribe learned of a Coastal Wave Power manufacturer giving back a contract for development of wave power which would have initially produced 1MW or enough to power electricity for 150 homes. Did the state not cooperate or did the Macah Tribe not have the funds or did the State spend too much money and the company was expecting a grant of some sort to develop the initial phase money for the project. Whatever the case is here the “Green” machine which was going to start of the coastal waters of Washington I blame on the direct responsibility of the neglect of the progressives by not adhering to fiscal restraint when it comes to the budget. No budget, equals no funds for innovation. No budget, no green projects. No budget, means a higher reliance upon innovation and entrepreneurs. This is an example of the government wanting is cake and eating it too. Taxes do not come out of mid-air. Making energy creates taxes in more ways than one. Innovation is the KEY to overcoming a recession. Government is not the key to dissolving a recession. Exploring for new resources, developing of innovation, striving for the next frontier is what will and only will let the state get to the other side of the mountain. Boeing has been struggling with the 787 and the state seems to be relying only on the 787 rescueing the state from complete foreclosure. When Bill Gates and Paul Allen started their project they had no success outside of their family until a friend lent them the last bit of money for printing so their could have a completed retail product. Otherwise they would have sold the Microsoft to probably a guy in Texas or someone else. Innovation has to be a complete package. No half way projects ever get off of the floor. The Ocean Shores area is perported to have gas under its soil. Geologists look at the surrounding structure and confirm this. The next step needs to be to ask the printer to complete the project and do seimic tests and then actually drill. The phrase “drill baby drill” is not just a moto but a radical idea of future fortunes for the state. Get Ocean Shores out of the stone age and into the modern age. Let’s build an internation airport in Ocean Shores instead of leaving gas in the ground. More tourists in the area will bring more dollars to the state. Ocean Shores is a diamond in the rough.


HB 1650 – Small Business first time violators

February 9, 2009
HB 1650 – First-time paperwork violations forgiveness

Shut my mouth. This is impossible. The democrats want to forgive sales tax and the penalty and interest for late charges which are associated with this amount. Or at least this is how I read this bill.

I can open up a business and get my alzheimers mother to be the owner of the business. Then under page 1, line 9 I guess I would have to correct the paperwork. It really does not say that I would have to pay the sales tax or b & o amount. They would waive the fine, penalty, or sanction under this section. So I would not be involved in a felony under line 17 But one of the exceptions for this law not to kick into affect is the assessment or collection of any tax, debt, revenue or receipt.  A lot of businesses do not indicate the sales tax on a line which states “Sales Tax’ but the auditors are directed to the bottom and assess a sales tax on the bottom number of the sales receipt. The difference between the sales price and the amount collected could be the sales tax. This law should be correcting this aspect of the law but is silent to this type of change or miscalcuation by the small business owner. The Governor could collect enough taxes to balance the budget just by this one mistake by business owners.

Labor and Industry is one of the agencies which has no remorse or authorization to correct unusual circumstances. Hopefully this will correct this mistake.   The section however does state from an adminstrtive viewpoint so really the problems with Labor and Industry will continue eventhough the spirit of this law states otherwise.  This law is extremely confusing and it does not arise to reality.  I see small businesses decoupling their industries for maximum forgiveness.

HB 1554 punch will be softened by this bill. If the law allows forgiveness of not paying the Labor and Industry taxes because it was not included on some type of paperwork will the L and I dept then be able to not enforce HB 1554. The STOP work provision would be counter to this provision except for the statement oncerning page 1, line 12 etc exceptions. More specifically Section 1. line 18 for 3(c). I can readily see that the two laws will cause confusion as to the interpretation of which law takes affect first.

No limitation of fines recurring is included in the sections of the law. So no statute-of-limittion proviso is included. See page 2, line 21-25 or 4(b).

This law can be interpreted as being more confusing on the first read. However, it really is saying. If you try to explain things away like the Secretary of the Treasury Geitner did then you are clear sailing for the first time fault. But remember, no penalties are to be assessed for the first time violator.


HB 1775 – Regulation of certain limousine carriers

February 9, 2009

HB 1775 Regulation of certain limousine carriers.

Here I read this last night so I will not provide specific line numbers.

Between the lines is sounds like the Port of Seattle is trying to creating a limousine service from the Sea-Tac to other outlying areas. But I do have some qualifying questions for this Bill.

1) Taxi cab drivers are able to start driving as a first time job. Some testing of qualifications are necessary. English seems to be an immediately desired qualification. Should the qualification for English and understanding of English be a higher qualification.

2) It would seem to me that a basic understanding of locations within the City of Seattle should be pressed as a requirement. So many of the taxi cab drivers are not qualified to answer basic scenic qualifications. A testing of scenic qualifications should be made.

3) Taxi cab drivers are artificially pressed into service to show off the advantages and disadvantages of the beauty of an area while driving a guest to their hotel/motel of choice or their desired destination. A verbal testing or a test driving of this should be done. Take out one or two hours of showing scenic driving to get a enjoyable ride by the patron testing.

4) Quite a few taxi cab drivers still do talk on the cell phone while they are driving the patron to a location.

5) English should be spoken only in the limousine unless the patron and the driver are able to speak the same language. This is not just as a convenience but as a safety requirement. The patron knows sometimes where they want to go. Other conversations on a cell phone are also not paying attention to the needs of the patron.

6) Radios unless requested should not be used in a taxi cab or limousine unless the patron desires.

7) A limousine driver should not be able to apply for a limousine license unless the driver has completed a minimum of one year as a taxi cab driver.

8) The testing requirements for a taxi cab driver and a limousine driver shall be from the same tests except for additional tests indicated above. So the requirements of testing for a limousine driver and a taxi cab driver shall not need to be duplicated if the taxi cab drivers license is held currently.

HB 1594 – Environmental Cleanup Grants

February 9, 2009

HB 1594 Environmental cleanup grants. This legislation would not allow for a graduated student to be able to take advantage of the student loan interest adjustment on an individuals income tax return. Also, if in the form of a grant then student education expenses would not be taken also. A grant would be given at the time of education and it must be current. If a repayment of the amount is owing after the education then since the amount was paid in a prior year the unreimbursed and now required to be reimbursed amount due to default would have to be paid back. This would be doubling punitive to the student. There is no recognition of “Conditional scholarship” in the IRS tax code. A better way would be to require work during the summer months in order to be eligible for the scholarship or grant in the next year’s timeframe. This would make more sense and conditioning upon completion of academic quarters would be based upon a quarter by quarter basis. Thus no “Equalization Fee” would be required. the process of the interest rate being established by the Board could be punitive for individual students. The rate should be established by the Student Loan Program rate in effect for a given period of time. This should not be determined directly by a Board which could arbitrarily increase or decrease the amount. Selected individuals thus could be punished or rewarded with this type of system. Annual consideration of the interest rate is unrealistic. Interest rates currently are fluctuating daily. Forgiveness of fees and penalties and interests rates which are established by the board could be adjusted to reward some and punish others in the same way as interest rates could be adjusted. What this would come about to is graduated students would be working for a two to five year period for minimum wage and after completion of their projects they would still continue under minimum wage in the industry because another crop of graduating students need to work for minimum wage. Thus the summer work program which is limited in time would be a better method of building a “green” career. Minimum wage sucks.