2009 Stimulus Plan Highlights
While the Congress is still battling to get the final version of the massive 2009 economic stimulus package (could cost tax payers as much as $800 billion when the deal is finalized) done before the weekend, I think it’s time to get an idea on what we can expect from the stimulus plan and how it works. After all, we, the tax payers, will eventually shoulder the bill, so we better know what benefits we will get from it, directly or indirectly.
So far we have heard so much talk about whether there will be a second stimulus payment check for every one, like the one we received early last year when the first economic stimulus plan was implemented, about whether the $7,500 first-time home buyer tax credit has to be paid back (a $15,000 tax credit for first-time home buyers has been approved by the Senate already, but it could be cut back in the final agreement). From what I see in the proposed package, though changes can still be made as the Senate tries to bring the total cost down, you will be disappointed when the bill gets onto President Obama’s desk for his signature because the plan won’t send second stimulus payment check, unless you receive Social Security benefits. Instead, middle-class Americans will be benefiting from a range of taxes cuts and incentives, from buying your first home, to purchasing a new vehicle, to improving your existing home. Actually, taxes cuts count more than one-third of the total amount.
Update 02/11/09: The approved final bill will cost a total of $789 billion, less than the original $838 billion the Senate version of the plan. As of February 11, 2009, tax cuts for individuals are reduced to $400 per worker and $800 per couple. Also, the $15,000 first-time homebuyer tax credit approved early by the Senate will be removed from the final bill to reduce the overall cost.
Update 02/12/09: In the final bill, people who receive Social Security benefits will get a one-time payment of $250 instead of the $300 originally proposed. Also, eligible first-time home buyers will receive $8,000 tax credit, not $15,000.
Update 02/13/09: Check out the breakdown and updated details of individual tax breaks of the final American Recovery and Reinvestment Act of 2009.
Update 02/18/09: Check out when social security beneficiaries will receive $250 one-time payment.
Let’s take a look at what we will get directly from the stimulus package as individuals:
Direct Cash Payments
- Give one-time $300 $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions.
Taxes Credit for Individuals
- Provide a $500 $400 per-worker, $1,000 $800 per-couple tax cut for two years. Those who don’t make enough money to pay federal income taxes could file returns next year and receive checks.
- Spare about 24 million taxpayers from being hit with the Alternative Minimum Tax (AMT) in 2009. The change would save a family of four an average of $2,300.
- Increase the earned-income tax credit for families with at least three children.
- Provide greater access to the $1,000 per-child tax credit for the working poor in 2009 and 2010. Workers making as little as $6,000 a year who pay no income taxes would be eligible for checks.
- Provide a $2,500 tax credit for college tuition and related expenses for 2009 and 2010.
- Repeal a requirement that a $7,500 $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Sept. 1, unless the home is sold within three years.
- Exclude from taxation the first $2,400 in unemployment compensation benefits in 2009.
- Homeowners could receive tax credits of up to $1,500 for upgrading furnaces and hot water heaters and making other improvements through 2010.
In addition to the direct cash/taxes benefits for individuals, the stimulus plan also provides tax relief to businesses hitting hard in the economic downturn. The proposed taxes cuts for businesses include:
- Provide cash injection into money-losing companies by allowing them to claim tax credits on past profits dating back five years instead of two;
- Allow money-losing businesses to apply a long list of business tax credits to taxes paid in the previous five years;
- Extend a provision allowing businesses buying equipment to speed up the depreciation through 2009;
- Repeal a Treasury provision that allowed firms that buy money-losing banks to use more of the losses as tax credits to offset the profits of the merged banks for tax purposes;
- Extend tax credits for renewable energy production.
The stimulus plan will cover unemployment benefits, health care, education, energy, etc. For people who lost their jobs, the plan will extend unemployment benefits through December 31, 2009, with increased weekly payment of $25 and job training. Another $26 billion will be used to subsidize health care insurance for those unemployed under COBRA program. The plan will also increase food stamp benefit for the poor by 13% and add a total of $3 billion in temporary welfare payment.
Now, are you still excited about the stimulus plan after knowing a little more about it? Do you think the spending can bring the country out of the recession in the second half of this year?
*Source CBS News
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