OBAMA ADMINISTRATION PROPOSES 10% TAX CREDIT FOR NEW JOBS AND INCREASED WAGES

The following excerpt is from the Department of Treasury website: PROVIDE A TEMPORARY 10-PERCENT TAX CREDIT FOR NEW JOBS AND WAGE INCREASES Current Law Under current law, there is no generally available income tax credit for job creation or increasing employees’ wages. Reasons for Change Although the economy is recovering from a severe economic recession and the private sector has increased employment, a tax credit designed to stimulate job creation and wage increases could help put more Americans back to work, provide tax relief targeted at America’s small businesses, and strengthen the foundation of the economic recovery. Proposal Under the proposal, qualified employers would be provided a tax credit for increases in wage expense, whether driven by new hires, increased wages, or both. The credit would be equal to 10 percent of the increase in the employer’s 2012 eligible wages over the prior year (2011). Eligible wages are the employer’s Old Age Survivors and Disability Insurance (OASDI) wages. The wage base for determining the maximum amount of OASDI wages per employee is $106,800 for 2011 and $110,100 for 2012. The maximum amount of the increase in eligible wages would be $5 million per employer, for a maximum credit of $500,000, to focus the benefit on small businesses. For employers with no OASDI wages in 2011, eligible wages for 2011 would be 80 percent of their OASDI wage base for 2012. The credit would generally be considered a general business credit. A similar credit would be provided for qualified tax-exempt employers. The Secretary may prescribe rules with respect to eligible wages. The credit would only apply with respect to the wages of employees performing services in a trade or business of a qualified employer or, in the case of a qualified employer exempt from tax under section 501(a), in furtherance of the activities related to the purpose or function constituting the basis of the employer’s exemption under section 501. Self-employment income would not be considered eligible wages. A qualified employer means any employer other than the United States, any State or possession of the United States, or any political subdivision thereof, or any instrumentality of the foregoing. A qualified employer also includes any employer that is a public institution of higher education (as defined in section 101 of the Higher Education Act of 1965). For purposes of determining the $5 million limit on the maximum amount of OASDI wages available for the credit, all employees of all corporations that are members of the same controlled group (using the 80-percent ownership test for filing a consolidated return) would be treated as employed by a single employer. For partnerships, proprietorships, etc., all employees under common control would be treated as employed by a single employer. The Secretary may prescribe rules with respect to predecessor and successor employers. 6 The credit also would be available for increases in earnings subject to tier 1 Railroad Retirement taxes subject to OASDI rates (section 3111(a)). Similar benefits would be extended to non-mirror code possessions (Puerto Rico and American Samoa) through compensating payments from the U.S. Treasury. The proposal would be effective for wages paid during the one-year period beginning on January 1, 2012.

OBAMA ADMINISTRATION PROPOSES ADDITIONAL TAX CREDITS FOR ADVANCED ENERGY PROJECTS

The following excerpt is from the Department of Treasury website: "ADDITIONAL TAX CREDITS FOR INVESTMENT IN QUALIFIED PROPERTY USED IN A QUALIFYING ADVANCED ENERGY MANUFACTURING PROJECT Current Law A 30-percent tax credit is provided for investments in eligible property used in a qualifying advanced energy project. A qualifying advanced energy project is a project that re-equips, expands, or establishes a manufacturing facility for the production of: (1) property designed to produce energy from renewable resources; (2) fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric vehicles; (3) electric grids to support the transmission, including storage, of intermittent sources of renewable energy; (4) property designed to capture and sequester carbon dioxide emissions; (5) property designed to refine or blend renewable fuels or to produce energy conservation technologies; (6) electric drive motor vehicles that qualify for tax credits or components designed for use with such vehicles; and (7) other advanced energy property designed to reduce greenhouse gas emissions. Eligible property is property: (1) that is necessary for the production of the property listed above; (2) that is tangible personal property or other tangible property (not including a building and its structural components) that is used as an integral part of a qualifying facility; and (3) with respect to which depreciation (or amortization in lieu of depreciation) is allowable. Under the American Recovery and Reinvestment Act of 2009 (ARRA), total credits were limited to $2.3 billion, and the Treasury Department, in consultation with the Department of Energy, was required to establish a program to consider and award certifications for qualified investments eligible for credits within 180 days of the date of enactment of ARRA. Credits may be allocated only to projects where there is a reasonable expectation of commercial viability. In addition, consideration must be given to which projects: (1) will provide the greatest domestic job creation; (2) will have the greatest net impact in avoiding or reducing air pollutants or greenhouse gas emissions; (3) have the greatest potential for technological innovation and commercial deployment; (4) have the lowest levelized cost of generated or stored energy, or of measured reduction in energy consumption or greenhouse gas emission; and (5) have the shortest completion time. Guidance under current law requires taxpayers to apply for the credit with respect to their entire qualified investment in a project. Applications for certification under the program may be made only during the two-year period beginning on the date the program is established. An applicant that is allocated credits must provide evidence that the requirements of the certification have been met within one year of the date of acceptance of the application and must place the property in service within three years from the date of the issuance of the certification. Reasons for Change The $2.3 billion cap on the credit has resulted in the funding of less than one-third of the technically acceptable applications that have been received. Rather than turning down worthy projects that could be deployed quickly to create jobs and support economic activity, the program –8 which has proven successful in leveraging private investment in building and equipping factories that manufacture clean energy products in America – should be expanded. An additional $5 billion in credits would support nearly $17 billion in total capital investment, creating tens of thousands of new construction and manufacturing jobs. Because there is already an existing pipeline of worthy projects and substantial interest in this area, the additional credit can be deployed quickly to create jobs and support economic activity. Proposal The proposal would authorize an additional $5 billion of credits for investments in eligible property used in a qualifying advanced energy manufacturing project. Taxpayers would be able to apply for a credit with respect to part or all of their qualified investment. If a taxpayer applies for a credit with respect to only part of the qualified investment in the project, the taxpayer’s increased cost sharing and the project’s reduced revenue cost to the government would be taken into account in determining whether to allocate credits to the project. Applications for the additional credits would be made during the two-year period beginning on the date on which the additional authorization is enacted. As under current law, applicants that are allocated the additional credits must provide evidence that the requirements of the certification have been met within one year of the date of acceptance of the application and must place the property in service within three years from the date of the issuance of the certification. The change would be effective on the date of enactment.

SECRETARY OF STATE CLINTON CONDEMNS ATTACKS ON ISRAELI DIPLOMATS

STATEMENT BY SECRETARY CLINTON I condemn in the strongest possible terms the bombing of an Israeli diplomatic vehicle in India and the attempted attack on Israeli Embassy personnel in Georgia. The scourge of terrorism is an affront to the entire international community. The United States places a high priority on the safety and security of diplomatic personnel around the world and we stand ready to assist with any investigation of these cowardly actions. Our thoughts and prayers are with the injured personnel in New Delhi and their loved ones.

OBAMA ADMINISTRATION PROPOSES EXTENSION OF PAY ROLL TAX DEDUCTION

The following excerpt is from the U.S. Department of Treasury website: TEMPORARY TAX RELIEF TO CREATE JOBS AND JUMPSTART GROWTH EXTEND TEMPORARY REDUCTION IN THE SOCIAL SECURITY PAYROLL TAX RATE FOR EMPLOYEES AND SELF-EMPLOYED INDIVIDUALS Current Law Most wages and salaries are subject to Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). Earnings from self-employment are subject to Social Security and Medicare taxes under the Self Employment Contributions Act (SECA). The FICA tax is imposed to fund two different benefit programs: (1) the old-age, survivor and disability insurance program (“OASDI”), which funds the Social Security program that provides monthly retirement, disability, and survivor benefits; and (2) Medicare hospital insurance (“HI”). Generally, the OASDI tax rate of 12.4 percent applies to taxable wages and salaries up to the OASDI wage base ($106,800 for 2011 and $110,100 for 2012), and the HI tax of 2.9 percent applies to all taxable wages and salaries. Generally, one-half of both OASDI and HI taxes are paid by the employer and the other half are paid by the employee through mandatory withholding. Earnings from self-employment are also subject to Social Security and Medicare taxes at the same total tax rates, and one-half of the amount of SECA tax (that is, the amount equivalent to the employer portion of FICA) is deductible for income tax purposes. For the first $106,800 of taxable wages and salaries received during 2011 and essentially the first $18,350 of taxable wages and salaries received during the first two months of 2012, the Social Security tax on employees was reduced by 2.0 percentage points, from 6.2 percent to 4.2 percent, and the Social Security tax on the self-employed was similarly reduced from 12.4 percent to 10.4 percent. The Social Security Trust Fund was held harmless and received transfers from the General Fund equal to the reduction in payroll taxes attributable to these reductions in the payroll tax rate. Reasons for Change The temporary reduction in Social Security tax provides relatively large benefits to workers who have been hardest hit by the recession and are most likely to spend their tax cut, stimulating the economy and creating jobs. Payroll tax cuts are particularly effective because they are delivered immediately in the worker’s paycheck, regardless of whether the worker has a current income tax liability. Extending this reduction in payroll taxes would provide continued financial assistance to middleclass families and encourage additional job creation.2 Proposal The Administration proposes to extend the 2.0 percentage point reduction in the Social Security tax on employees to the first $110,100 of taxable wages and salaries received during 2012. Similarly, the Administration proposes to extend the 2.0 percentage point reduction in the Social Security tax on the self-employed to the first $110,100 of taxable self-employment earnings received during 2012. The Social Security Trust Fund will be held harmless and receive transfers from the General Fund equal to the reduction in payroll taxes attributable to these reductions in the payroll tax rate. The proposal would be effective upon the date of enactment

OBAMA ADMINISTRATION PROPOSES CHANGING INCENTIVES TO INCREASE DOMESTIC MANUFACTURING

The following excerpt is from the Department of Treasury website: INCENTIVES FOR EXPANDING MANUFACTURING AND INSOURCING JOBS IN AMERICA PROVIDE TAX INCENTIVES FOR LOCATING JOBS AND BUSINESS ACTIVITY IN THE UNITED STATES AND REMOVE TAX DEDUCTIONS FOR SHIPPING JOBS OVERSEAS Current Law Under current law, there are limited tax incentives for U.S. employers to bring offshore jobs and investments into the United States. In addition, costs incurred to outsource U.S. jobs generally are deductible for U.S. income tax purposes. Reasons for Change On January 11, the White House released a report that details the emerging trend of "insourcing" and how companies are increasingly choosing to invest in the United States. For example, real business fixed investment has grown by about 18 percent since the end of 2009. In the past two years, over 400,000 manufacturing jobs have been created, while manufacturing production has increased by about 5.7 percent on an annualized basis since its low in June of 2009, its fastest pace in a decade. In addition, continued productivity growth has made the United States more competitive in attracting businesses to invest and create jobs by reducing the relative cost of doing business compared to other countries. The Administration would like to make the United States more competitive in attracting businesses by creating a tax incentive to bring offshore jobs and investments back into the United States. In addition, the Administration would like to reduce the tax benefits that exist under current law for expenses incurred to move U.S. jobs offshore. Proposal The proposal would create a new general business credit against income tax equal to 20 percent of the eligible expenses paid or incurred in connection with insourcing a U.S. trade or business. For this purpose, insourcing a U.S. trade or business means reducing or eliminating a trade or business (or line of business) currently conducted outside the U.S. and starting up, expanding, or otherwise moving the same trade or business within the United States, to the extent that this action results in an increase in U.S. jobs. While the creditable costs may be incurred by the foreign subsidiary of the U.S.-based multinational company, the tax credit would be claimed by the U.S. parent company. A similar benefit would be extended to non-mirror code possessions (Puerto Rico and American Samoa) through compensating payments from the U.S. Treasury. In addition, to reduce tax benefits associated with U.S. companies’ moving jobs offshore, the proposal would disallow deductions for expenses paid or incurred in connection with outsourcing a U.S. trade or business. For this purpose, outsourcing a U.S. trade or business means reducing or eliminating a trade or business or line of business currently conducted inside the United States and starting up, expanding, or otherwise moving the same trade or business outside the United States, to the extent that this action results in a loss of U.S. jobs. In determining the subpart F income of a controlled foreign corporation, no reduction would be allowed for any expenses associated with 28 moving a U.S. trade or business outside the United States. For purposes of the proposal, expenses paid or incurred in connection with insourcing or outsourcing a U.S. trade or business are limited solely to expenses associated with the relocation of the trade or business and do not include capital expenditures or costs for severance pay and other assistance to displaced workers. The Secretary may prescribe rules to implement the provision, including rules to determine covered expenses. The proposal would be effective for expenses paid or incurred after the date of enactment.”

CHAIRMAN JOINT CHIEFS OF STAFF THINKS WE CAN GET OUT OF AFGHANISTAN BY 2014

The following excerpt is from the Department of Defense American Forces Press Service Chairman Optimistic That Afghan Forces Will be Ready by 2014 By Cheryl Pellerin American Forces Press Service ABOARD A MILITARY AIRCRAFT, Feb. 12, 2012 - A quick trip to Afghanistan this week, and meetings with leaders and troops there, encouraged the chairman of the Joint Chiefs of Staff that the Afghan National Security Forces will be ready by 2014 to take the combat lead. Army Gen. Martin E. Dempsey spent time in Kabul with Afghan Minister of Defense Abdul Rahim Wardak, U.S. Marine Corps Gen. John R. Allen, commander of International Security Assistance Force–Afghanistan and U.S. Forces Afghanistan, and the ISAF staff. The chairman also met with U.S. Army Lt. Gen. Daniel P. Bolger, commanding general of the NATO Training Mission-Afghanistan, and his staff. For NTM-A, 6,000 international trainers and advisers at 70 training sites in 21 provinces recruit and train Afghan soldiers and police. With U.S. Army Maj. Gen. Daniel B. Allyn, commander of ISAF Regional Command-East and commanding general of the Army 1st Cavalry Division, Dempsey visited forward operating base Shank in Logar province to meet Army Col. Mark H. Landes, commander of the 3rd Brigade Combat Team, 1st Armored Division, and his Task Force Bulldog leadership team. "The intent was to try to knit together the campaign plan at the national level with the ANSF campaign plan, and then to see how a local commander, a colonel-level commander, is implementing it," Dempsey told American Forces Press Service. When he travels overseas, Dempsey has an office in an Airstream trailer called the Silver Bullet that's secured to the floor of a C-17 aircraft. There, on his way home from brief visits to Afghanistan and to meet with defense officials in Egypt, Dempsey writes notes to the spouses or parents of some of those he's met in Afghanistan to let them know their son or daughter or husband is doing okay. "What I learned, in a very encouraging way, is that [the campaigns and implementation are] very well knit together," he said. Each of their plans complemented the other " ... and we are achieving the goals that the alliance established in Lisbon to get us to [20]14," the chairman added.He was referring to the 2010 summit in Portugal of NATO heads of state and their agreement with Afghan President Hamid Karzai to gradually withdraw combat forces by 2014. "One of the very pointed questions I asked [of the tactical commanders] was, How are the Afghan National Security Forces doing?" the chairman said. "I got the same answer every time," he added. "That they are doing very well. That they're not ready to stand on their own yet but [the commanders] think, with another fighting season looming and the effort to continue building their capabilities over time, the next year, the year after, kind of in a rolling conversion, [the ANSF] will be able to take the lead in combat operations." Dempsey gets a lot out of even short trips to the war zone because he likes to talk to people, and he was once in the business of building a national security force. During the summer of 2003 he took command of the 1st Armored Division and deployed to Iraq as part of Operation Iraqi Freedom. He was the first commander of Multi-National Division–Baghdad. Then from 2005 to 2007 he was commander of Multi-National Security Transition Command-Iraq. Dempsey said he has to understand the processes that make things work -- the U.S. government, NATO, the Afghan government, and any other process that affects military operations. "But you also it seems to me have to gain a feel [for things], and you can't gain a feel from Washington," he added. "The chairman -- any chairman -- has to get out, look people in the eye, walk the ground ... have a private moment with Minister Wardak," Dempsey explained, "and ... ask him how he's doing ... and in so doing gain a feel that you can then combine with your understanding and have a reasonably good chance to come to the correct conclusion." What Dempsey learned in Iraq is that building any kind of security force requires three pillars of effort. "You've got to build the basic blocking and tackling of fighting, and you've got to build an institution that can pay them, provide logistics and educate them," he said. "In the middle of that you've got to partner with them initially ... and then migrate or evolve to embedded teams [in which] they're doing the heavy lifting," Dempsey said. "That's what I learned doing this in Iraq." In Afghanistan, he said, what he learned and felt on his visit is that "where we are now with the Afghan security forces is we're beginning to build that institution that will eventually be able to support them and, in so doing, make them self reliant." The chairman addedthat " we're beginning to migrate from the partnership role to the embedded training team and that's actually quite encouraging. ... Each [pillar] is beginning to become a little clearer." The big question, he said, is will they be ready? "The answer I'm coming back with is, at least in the snapshot that I took on this trip, and I'll add other snapshots over time, ... is that they will," the chairman said."

3 PLEAD GUILTY TO RIGGING BIDS AT REAL ESTATE FORECLOSURE SALES

The Following excerpt is from the U.S. Department of Justice website: February 9, 2012 “WASHINGTON – Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.   Charges were filed today in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.   According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.   “The Antitrust Division will continue to pursue vigorously the perpetrators of these fraudulent schemes. Those who eliminated competition from the marketplace and lined their pockets while preying on the misfortune of others will be held accountable for their actions,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division also will aggressively seek to forfeit the proceeds earned by those who took a leading role in facilitating these conspiracies.”   “The integrity of the real estate market depends on the transparency and fairness of all participants,” said FBI Special Agent in Charge Stephanie Douglas. “When individuals take advantage of the public’s trust to enrich themselves they damage the very foundation of our economy. The FBI is committed to working with our local and federal partners to continue to bring those who engage in anticompetitive activities to justice.”   Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.   The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.   Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.   Today’s charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif.   The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office.”