Economic Stimulus Package Clears Congress
By Jeff Carlson and John Scorza, Washington Staff Writers
Congress has approved temporary economic stimulus legislation that is expected to be signed by President George W. Bush on February 13, 2008. The package offers increased expensing limits for small businesses and one-time tax rebates to millions of American citizens. The basic shape of the package had been agreed on by President Bush and House leaders from both parties in January, but Senate Democrats almost derailed passage in February by insisting on amending the agreement. In the end, those efforts were defeated and afterward a slightly modified bill sailed through both houses of Congress quickly.
Intense negotiations between Senate leaders and the White House on February 7 lead to agreement on a slightly altered House stimulus package that the Senate quickly approved by a vote of 81-16 and sent to the House for that chamber's approval. The revised version also extends rebate checks to some 22 million low-income senior citizens and 250,000 disabled veterans, while denying refunds to illegal immigrants.
Senate Majority Leader Harry Reid (D-Nev.) declared victory despite failing to advance a package that included extended unemployment benefits and low income home heating assistance. Nonetheless, the Majority Leader vowed that Congress would quickly assemble and pass what he termed a "housing package" that would provide much needed financial assistance to the troubled mortgage industry. "We were able to make the House bill better, and while I am pleased with that result, there is still more to do," he said. Reid also stated that lawmakers would continue to monitor the economic downturn and consider developing a second stimulus measure.
Stimulus Specifics
Under the new legislation, individuals would receive rebate checks up to $600; married couples up to $1200, and an additional $300 for each child under 17 years old. The minimum rebate amount is $300 ($600 for married filing jointly). Taxpayers will receive this amount if they have at least $1 of tax liability or $3,000 in qualifying income, defined as the sum of net self-employment income, veterans' disability payments (including payments to survivors of disabled veterans), and Social Security benefits. Income eligibility for the rebates is capped at $75,000 for individuals and $150,000 for married couples.
In addition, the measure provides employers the opportunity to fully expense equipment up to $250,000 in the year it is purchased with an overall annual investment limit of $800,000 and provides for a one-time 50 percent bonus depreciation on new equipment in the year it is placed in service. In addition, the measure increases the loan limits for Fannie Mae and Freddie Mac, as well as FHA-approved mortgages.
House Ways and Means Chairman Charles B. Rangel (D-N.Y.) said he hopes that after the recession is over, Congress would recognize that millions of poor Americans are having trouble meeting their basic needs, while affluent Americans are unaware that a recession exists. Ranking Member Jim McCrery (R-La.) said the stimulus bill is an excellent example of the House and Senate working on a bipartisan basis. He noted that the best way to stimulate the economy is to give businesses tax breaks to create jobs that provide paychecks that Americans can spend.
The bill does not contain revenue offsets and will increase the federal budget deficit by $124.5 billion over 10 years, according to Senate estimates.
Senate Amendments to House Plan
Senate Republicans on February 6 narrowly defeated a motion to proceed to a $158 billion Democratic stimulus package by a vote of 58-41, leaving Senate Majority Leader Reid little choice other than to turn to the less costly House-approved measure. Senate Democrats had hoped to add measures providing additional unemployment insurance benefits, another $1 billion in aid for home heating bills, and provisions regarding home mortgages. As part of the plan, states could have extended unemployment insurance benefits for an additional 13 weeks to those whose benefits had run out. States with high unemployment rates--6.5 percent or more for the previous three months--could have provided an another 13-week extension.
However, Senate Minority Leader Mitch McConnell (R-Ky.) was able to secure passage for an amendment to the House bill that would allow rebate checks for low income senior citizens and disabled veterans, and thwart illegal immigrants from receiving them. This provision received bipartisan Senate support, and the House quickly followed, approving the measure 380-34.
Checks Will Be in the Mail
Treasury Secretary Henry M. Paulson, Jr., said in a February 7 statement that on passage of the stimulus bill, "the IRS will manage the current tax filing season and simultaneously prepare to issue [the rebate checks] starting in early May. Payments will be largely completed this summer."
A White House spokesman indicated February 8 that the IRS will immediately begin preparing to issue checks after President Bush signs the bill, although the exact amounts owed to eligible recipients cannot be calculated until 2007 tax returns are filed.
For more help with the many tax changes that may affect you for the 2007 tax filing season and beyond, take a look at the Toolkit Tax Guide 2008. This easy-to-understand book helps taxpayers--including individuals and entrepreneurs--manage their taxes so they can better prepare their 2007 tax returns, as well as begin planning for 2008. It also includes free income tax preparation of a state and federal return and e-filing with CompleteTaxTM, CCH's easy-to-use online tax return service for individuals. Toolkit Tax Guide 2008 is available in major retail and online bookstores nationwide; via the Business Owner's Toolkit bookstore; or by calling 1-800-248-3248.
- Related items:
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- Economic Stimulus Plan: How Might It Work?
- Tax Round-Up: A Look Ahead to Changes in 2008
Posted February 12, 2008.
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