January 25, 2008
Details of Tax Cuts in Economic Stimulus Plan
President Bush and House leaders agreed yesterday on $146.3 billion in tax cuts intended to stimulate the economy. More than $100 billion is in the form of tax rebate checks of up to $600 for individuals or $1,200 for couples, and the remainder of the tax cuts are aimed at encouraging businesses to increase their investments in new equipment by the end of 2008. Here are some details from the White House Fact Sheet:
- The agreement reached today would allow Americans to keep more of their money to stimulate consumer spending. The growth plan provides approximately $100 billion in temporary relief that will allow Americans to keep or spend more of their incomes. Under the agreement:
- In 2008, taxes would be cut from 10 percent to zero percent on the first $6,000 dollars of taxable income for individual taxpayers and the first $12,000 of taxable income for couples. Taxpayers could receive rebates of up to $600 for individuals and $1,200 for couples. A minimum of $300 per person and $600 per couple would be available to those with at least $3,000 of earned income. This relief would be available to everyone with adjusted gross income less than $75,000 for singles and $150,000 for married couples filing jointly. It will be phased out for taxpayers above those income thresholds.
- Everyone eligible for this relief would also receive an additional $300 per child. For example, this would mean up to $1,800 of tax relief for an eligible couple with two children.
- The agreement would also offer incentives to spur business investment. The agreement would save businesses approximately $50 billion in near-term taxes through a temporary change to the tax code that will allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. This will encourage businesses to expand and create new jobs now because buying equipment, software, and tangible property this year will dramatically lower their taxes. The agreement also increases expensing for small businesses.
Press and blogosphere coverage:
- Angry Bear
- Associated Press
- Center on Budget & Policy Priorities
- Greg Mankiw's Blog
- Mauled Again
- New York Times
- Tax Foundation's Tax Policy Blog
- Tax Policy Center's TaxVox
- A Taxing Matter
- Wall Street Journal
- Washington Post
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For what tax year will the income cut-offs exist? Is it for the return filed for 2007 (which have to be in by 4/15/08 so that doesn't seem like it would leave much time for the govt to issue checks)or is it from 2006 returns, or from W-2s for 2008? Not sure how this is figured. Thanks.
Posted by: Caleb | Jan 25, 2008 8:30:10 AM
Thanks for the reply.
A simple follow-up clarification: So this means for all those people who file on time by 4/15/08, the govt is actually able to turn around rebate checks beyond what's in the return itself only a month or two later?
But we can't get ice to New Orleans in less than a few months if ever? Just wondering how the mechanics of this actually work at the IRS. Thanks, again.
Posted by: Caleb | Jan 25, 2008 10:57:51 AM
if you are married filling jointly with an AGI of about 156K and three kids, will you get any rebate?
Posted by: Orrin | Feb 8, 2008 1:52:59 PM
So I have to ask what may be silly questions relative to the economic expertise here, but I'd like to know.
(1) If I get a check from the feds this year am I going to have to declare it as income and pay federal tax on it? If I recall, we had to pay tax on the "income" the last time there was a similar rebate.
(2) Where did the feds find the $160 billion to pay us? Was this just lying around? Or do they have to borrow it, thus increasing the federal debt, which we all will end up paying back with interest in the future? Are we losing money in the long run for what amounts to a short term loan.
Posted by: Gordon | Feb 9, 2008 1:25:46 PM
how will the Economis Stimulus Plan, just signed, affect Estate Taxes?
Posted by: john h. vagelos | Feb 13, 2008 6:11:14 PM
I know there will be a tax rebate this year as a stimulus to the economy. Has there been other times in the past where this approach, a tax rebate, has been used? What is its success rate? I am a teacher and will use this info in the classroom.
Thanks, CJ Haysley
home email address is: email@example.com
Posted by: cj haysley | Feb 18, 2008 2:29:45 PM
Something that I have not seen so far is a clear statement of the tax status of this economic stimulus. Is the state or local government going to be asking for their cut of the stimulus check next April 15?
Posted by: Al Pfalzgraf | May 5, 2008 1:16:16 PM