What is the Stimulus Package and How Will it Impact Us Introduction In January 2009, the new administration under President Obama outlined the measures that it intends taking to counter the downswing in the economy, not seen since the days of the Great Depression nearly eight decades ago. These measures are what constitute the “Stimulus Package”. (1). The Stimulus Package Put in a nutshell the “Stimulus Package”, is a two-year package that envisages new spending of $550 billion in incentives and $275 billion in tax relief, making a total financial outlay of $825 billion to counter the impact of the downturn in the economy, which has already led to a loss of 2.6 million jobs.
The “Stimulus Package” is approximately equivalent to three percent of the gross domestic product for the next two years, and turns out to be the largest single expenditure in the history of the United States of America. (1). For business organizations the “Stimulus Package” offers an incentive for investments in new plants and equipment to make them more energy efficient and competitive, through the bonus of depreciation offered in such investments.
In addition business organization at a loss this year can get refunds on taxes paid as far back as 2003, in contrast to the prevailing rules that permit carrying back of losses only as far as two years. (1). This is from a business perspective of the “Stimulus Package”, but what is it that the common citizen in the United States of America, like me, can look forward to in this package? Impact of the Stimulus Package on the Common Citizen Tax cuts on many fronts are what the common citizen can look forward to in the “Stimulus Package”.
I can look forward to a $500 tax credit through the reduced pay check withholding of the package. Being a mother of twins I can look forward to a $1000 child-tax credit, which is fully refundable. (2). In addition to these tax refunds, my husband and I can look forward to the $800 tax credit for couples on their earned income during the years 2009 and 2010. This is a refundable credit and so we can expect some money back on the income tax we pay in these years.
My husband and I can look forward to an exemption on the alternative minimum tax (AMT) for our joined income of up to $70,950, bringing relief on this front. (3). Since I am doing a college education program, I would derive benefits from the expansion of the Federal Hope scholarship, whereby I would be eligible to tax credits of up to $ 2,500 a year for the college tuition fees for all the four years in place of $1,800 for the first two years.
This tax credit facility would also be forty percent refundable and the cost of textbooks would also be included in it. Under the tax-advantaged college savings plans for 2009 and 2010, I could claim tax exemptions for expenses on computer-related expenses. (3). My husband and I have been contemplating the purchase of a new house and should that materialise, we could look forward to a refundable tax credit of $8000, as this is our first house purchase, though we face the restriction of not selling it for three years to avail of this tax benefit.
Purchases that would go to make the house more energy efficient, like a new furnace or insulation material, would make us eligible for further tax cut credits up to $ 1,500. In place of the new home, should we choose to invest in a new automobile we can expect tax credits there too. The purchase of a plug-in hybrid vehicle would make us eligible for $7,500 tax credit, or in case of the purchase of a new car costing less than $ 49,000, we would be eligible to deduct state, local, and excise taxes, and also the interest on the car loan.
(3). Finally the restrictions on H1B visas for business organizations receiving funding under the Troubled Asset Relief Program (TARP) would mean less inflow of foreign workers, increasing the job security of my husband and myself. (4). Conclusion The “Stimulus Package” while offering incentives and tax benefits to business organization, does also offer a wide range of relief to the ordinary citizens of the United States of America. Works Cited 1. Bendavid, Naftali.
Williamson, Elizabeth & Sudeep, Roy. “Stimulus Package Unveiled”. 2009. The Wall Street Journal. 12 April 2009. . 2. Drucker, Jesse & Vaughan, Martin. “Stimulus Outlines $275 Billion in Tax Cuts, Including Breaks for Business”. 2009. The Wall Street Journal. 12 April 2009.. 3. “The Stimulus Package: Tax Cuts for Individuals”. 2009. The New York Times. 12 April 2009.. 4. “The Impact of the Stimulus Package on Immigration Law”. 2009. Greenbaum. 12 April 2009. .