Obama $300 Billion 2009 Tax Cut and Incentives

Economic Stimulus Plan Cost to More Than Double in Two Years

Jan 6, 2009 Martha R. Gore

The economic stimulus plan costing $300 billion being created by President-elect Barack Obama and a Democrat Congress may eventually cost $775 billion.

President-elect Barack Obama is planning huge tax breaks for businesses and individuals with a cost of $300 billion that is expected to grow at least another $400 billion in the next two years. It will be the largest tax cut in history, dwarfing President George W. Bush's $350 billion in 2003. Some portions of the package may differ from those announced during the presidential campaign.

Obama and Congress Economic Stimulus Plan 2009

The $300 billion economic stimulus plan being proposed by Obama and the Democrat Congress is expected to effect both individuals and businesses. Adding businesses to the mix may satisfy Republicans who have emphasized that the package should rely more on tax cuts rather than spending more money.

The plan would involve cuts for people who pay income taxes or who claim earned-income credit, a refund designed to lessen the impact of payroll taxes on low-and-moderate-income workers. It would be part of the "Making Work Pay" proposal that Mr. Obama outlined during his election campaign. At that time, he promised to give a credit of $500 per individual or $1,000 per family. (Wall Street Journal, 01/05/2009)

The 2008 Economic Stimulus Plan Comparion

The 2009 economic stimulus plan is similar to the $131 billion program in 2008 which did little to stop the slowdown in the economy. Instead of spending the money, consumers paid bills or saved the cash. With the United States (U.S) now officially declared in a Recession, the same thing could happen in 2009.

The Business Tax Package

The 2009 economic stimulus plan for business will include:

Allowing companies to write off huge losses incurred in 2008 as well a those from 2009.
Retroactively reduce tax bills dating back five years.
Write-offs would be retroactive to expenditures made as of Jan 1, 2009.
One-year tax credit for companies that make new hires or forego layoffs.
Write-offs for a broad range of expenditures worth up to $250,000 in 2009 and 2010 instead of the current limit of $175,000.

There is pressure from business lobbyists to allow companies that haven't paid corporate income taxes to be included in the tax breaks. These would include start-up companies, alternative energy firms and large corporations, such as the automotive manufacturing companies.

Obama Long Range Planning

Long range economic planning by Obama will include:

To create or save three million jobs.
Building and renovating roads, bridges and schools.
Reduce the U.S. dependence on foreign oil through spending and tax incentives
Modernize health care technology.

Tensions have been created by fiscal conservatives, such as the Blue Dog Democrats, who are demanding provisions imposing budgetary controls on future spending. (New York Times, 01/04/2009)

Obama had hoped that Congress would pass the tax and economic stimulus package before the Jan. 20 inauguration. It now appears that may not happen until just before the Congressional recess on Feb. 13, 2009

Source:

New York Times

Wall Street Journal

The copyright of the article Obama $300 Billion 2009 Tax Cut and Incentives in American Affairs is owned by Martha R. Gore. Permission to republish Obama $300 Billion 2009 Tax Cut and Incentives in print or online must be granted by the author in writing.

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