February 13, 2008

President Bush poised to sign economic stimulus package

Legislation updates provided by Rob Smith, Ceridian manager of Government Relations

President Bush poised to sign economic stimulus package
President Bush is expected tomorrow to sign a $160 billion economic stimulus package, giving a green light for the U.S. Treasury to send tax rebate checks to most Americans starting in May.

The tax rebates will be based on taxpayers' federal tax filings for 2007. Most taxpayers will receive a rebate for $600 if they filed as an individual or $1,200 if they filed as a married couple, assuming they paid at least that much in federal income tax for 2007. For taxpayers who paid between $300 and $600 in federal taxes for 2007 and married couples who paid between $600 and $1,200, their rebate amount will be whatever they paid in tax.

To assist people who earn little or nothing, the new law will provide people who made at least $3,000 in income in 2007 from a job, Social Security and/or certain veterans benefits, with a flat rebate of $300 for single filers and $600 for married couples.

The original economic stimulus bill that the White House and the House of Representatives negotiated did not count Social Security and veterans benefits as income for the purpose of qualifying individuals for rebate checks. The Senate extended the package to individuals who receive these benefits and was able to convince House members and President Bush to agree. This amendment will allow roughly 20 million seniors and 250,000 veterans to receive stimulus checks.

Additionally, taxpayers will receive $300 per child under the age of 17 as of December 31, 2008. The tax rebates -- including the per child rebates -- will phase out for individuals with over $75,000 in adjusted gross income and $150,000 for couples. The rebate will be reduced $50 for every $1,000 taxpayers make over the income limits.

Single filers with a 2007 AGI of $87,000 and married couples who made $174,000 and above will not receive a rebate check. Taxpayers who are claimed as a dependant on someone else's tax return, such as many high school and college-age workers, will also not be eligible for the rebate.

The package will also provide significant tax breaks to small businesses. Under the plan, small businesses would be able to write off $250,000 worth of expenses -- up from the current $125,000 limit -- and could deduct an additional 50 percent of the cost of certain investments for 2008.

The plan also aims to help ease mortgage market troubles by increasing the mortgage dollar amount government-sponsored Freddie Mac and Fannie May can guarantee from $417,000 to $600,000.

Democratic lawmakers have suggested that they might push for further steps to accelerate economic growth and cushion the blow of a slow-down, including an extension of unemployment benefits, an expansion of food stamps and increased federal funding on the nation's roads and infrastructure. The White House has repeatedly rejected more emergency measures, claiming that the President supports the bill as passed.