Thread: Rebate Stimulus passes

http://www.msnbc.msn.com/id/22782454?GT1=10755

Bush hails tax-rebate deal as ‘robust’
Rebates for families, business tax cuts to boost the economy

Lawmakers announce tax rebate deal
Jan. 24: Congressional leaders announce a deal with the White House on an economic stimulus package that would give most tax filers refunds.
MSNBC

Bush hails economic stimulus deal
Jan. 24: President Bush says that the tax rebates will be “an effective, robust and temporary set of incentives” that will boost the economy.
MSNBC


updated 2 hours, 13 minutes ago
WASHINGTON - Congressional leaders announced a deal with the White House Thursday on an economic stimulus package that would give most tax filers refunds of $600 to $1,200, and more if they have children.

House Speaker Nancy Pelosi said Congress would act on the agreement — hammered out in a week of intense negotiations with Republican Leader John A. Boehner and Treasury Secretary Henry Paulson — “at the earliest date, so that those rebate checks can be in the mail.”

President Bush is hailing the deal with congressional leaders on tax rebates and business tax cuts as "an effective, robust and temporary set of incentives" that will boost the U.S. economy.

The rebates, which would go to about 116 million families, had appeal for both Democrats and Republicans. Pelosi’s staff noted that they would include $28 billion in checks to 35 million working families who wouldn’t have been helped by Bush’s original proposal. Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress’ Joint Tax Committee — would go to individuals who pay taxes.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates.

The first rebate payments could begin going out in May, and most people could have them by July, Paulson said, noting that the IRS will already be overwhelmed processing 2007 tax returns. The rebates were expected to cost about $100 billion, and the package also includes close to $50 billion in business tax cuts.

The package would allow businesses to immediately write off 50 percent of purchases of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A Republican-written provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

“I can’t say that I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come,” Pelosi said.

Boehner said the agreement “was not easy for the two of us and our respective caucuses.”

“You know, many Americans believe that Washington is broken,” Boehner said. “But I think this agreement and I hope that this agreement will show the American people that we can fix it and will serve to move along other bipartisan agreements that we can have in the future.”

Paulson said he would work with the House and Senate to enact the package as soon as possible, because “speed is of the essence.”

The Treasury Department has already been talking to the IRS about getting the checks out “as quickly as possible, recognizing that the tax filing season is ongoing,” said Treasury spokesman Andrew DeSouza.


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The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children.

The agreement left some lawmakers in both parties with a bitter taste, complaining that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension.

“I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own,” Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said in a statement.

Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving out the unemployment extension was “a mistake,” as he announced plans to craft a separate stimulus package in the Senate starting next week.

Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for President Bush’s signature, but he noted the Senate would likely try to add more spending to the package.

“I expect that the (Finance) Committee and other senators will work to improve the House package by adding funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief and infrastructure investment,” Reid said in a statement.

Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don’t make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush’s initial proposal.

To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac’s loan purchases.

After a key Wednesday night meeting in which the parameters of an agreement were reached, Pelosi and Boehner spoke again Thursday to cement the accord.

In the talks, Pelosi pressed to make sure tax relief would find its way into the hands of lower-income earners while Boehner pushed to include upper middle-class couples, according to congressional aides.

The package was drawing fire from liberal activists and labor unions upset that proposals to extend unemployment insurance and boost food stamps had been dropped. Many Democratic lawmakers had assumed those proposals would make it into the package, and critics of the deal said those ideas could pump money into the economy more quickly than tax rebate checks that won’t be delivered until June.

Democrats wanted to extend unemployment benefits for people whose 26 weeks of benefits have run out, but Republicans resisted.

Conservative Republicans, meanwhile, were likely to be restless over tax rebates going to those without income tax liability.

Democratic aides said greater GOP flexibility over giving relief to poor families with children — who would not have been eligible under Bush’s original tax rebate proposal — was the catalyst that moved the talks forward.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed

May angles discussed http://www.bigbigforums.com/news-inf...mic-boost.html

( Ya' scooped me this time, Crick ! )

Originally Posted by okie

I wish they would put an opt out on this thing.

Same here IF we are going to have to deduct it from next year's tax return. Yeah I could throw it into savings and earn some interest off of it, but the temptation would be strong to use it to pay off bills.

okie I wish they would put an opt out on this thing.

Mark the check "Return To Sender" ?

Rebate deal could mean checks by May
By ANDREW TAYLOR and JULIE HIRSCHFELD DAVIS, Associated Press Writers
1 hour, 25 minutes ago

WASHINGTON - With unprecedented speed and cooperation, Congress and the White House forged a deal Thursday to begin rushing tax rebates of $600 to $1,200 to most tax filers by spring, hoping they will spend the money just as quickly and jolt the ailing economy to life.

Rebates would be even higher for families with children.

The one-time tax rebates are at the center of a hard-won agreement to pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001. House Speaker Nancy Pelosi, Republican leader John Boehner and Treasury Secretary Henry Paulson worked out the details in negotiations that stretched into Wednesday night at the Capitol.

About two-thirds of the tax relief would go out in rebate checks to 117 million families beginning in May. Businesses would get $50 billion in incentives to invest in new plants and equipment.

Individual taxpayers would get up to $600 in rebates, working couples $1,200 and those with children an additional $300 per child under the agreement. In a key concession to Democrats, 35 million families who make at least $3,000 but don't pay taxes would get $300 rebates.

The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000. Contributions to IRA and 401(k) retirement accounts and health savings accounts would not count toward the income limit.

"This package will lead to higher consumer spending and increased business investment," Bush said in hailing the agreement.

The bill will go straight to the House floor next week and on to the Senate, where some Democrats hope to add elements such as extending unemployment benefits for workers whose benefits have run out.

Indeed, many Democrats, such as Ways and Means Committee Chairman Charles Rangel, D-N.Y., and Edward Kennedy of Massachusetts, the liberal lion of the Senate, were deeply unhappy that Pelosi agreed to jettison that proposal in late-stage talks, as well as plans to increase food stamp payments.

"I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own," Rangel said.

The administration signaled it's unlikely to welcome efforts to broaden the measure, and pressure was mounting in the Senate to accept the hard-won deal.

"The American people are not going to have a lot of patience for taking time," Paulson said.

If the Senate gives quick approval, the first rebate payments could begin going out in May and most people could have them by July, he said.

It has become increasingly clear that the economy is teetering on the edge of recession, if it hasn't already gone over that line. The crisis in subprime home loans has hit hard at many lending institutions, cramping credit for almost everyone else. Economic growth has all but disappeared, companies are reporting big losses and Wall Street had been tumbling day after day — even after emergency Federal Reserve rate-cutting — until Wednesday's hopeful talk about the stimulus deal. The Dow Jones industrial average was up more than 100 points Thursday after soaring nearly 300 the day before.

In addition to concerns openly expressed by lawmakers, members of Congress are not eager to run for re-election this fall with voters fearful of losing jobs in a recession.

For businesses, the stimulus measure would allow them to immediate tax write-offs for 50 percent of the purchase price of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped in end-stage talks.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

"I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come," Pelosi said. She said that House Democrats may act on other proposals to stimulate the economy, particularly if it worsens in coming weeks.

Boehner said the agreement "was not easy for the two of us and our respective caucuses."

"You know, many Americans believe that Washington is broken," the Ohio Republican said. "But I think this agreement and I hope that this agreement will show the American people that we can fix it."

Paulson said he would work with the House and Senate to enact the package and declared that "speed is of the essence." He cautioned that "the work is far from over."

The agreement left some lawmakers in both parties with a bitter taste, and they complained that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension.

Majority Leader Harry Reid, D-Nev., said the goal is to send the package to the White House by Feb. 15 for Bush's signature, but he noted the Senate was likely to try to add more spending.

Bush had supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households of people who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush's initial proposal.

To address the mortgage crisis, the package raises the limit on Federal Housing Administration loans from $362,790 to as high as $729,750 in expensive areas, allowing more subprime mortgage holders to refinance into federally insured loans. To widen the availability of mortgages across the country, it also provides a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

http://news.yahoo.com/s/ap/20080125/...Wt2gyV18Cs0NUE


How the rebate works
By The Associated Press
2 hours, 59 minutes ago

How Americans in different financial situations would fare under the rebate plan proposed by House leaders and the White House.

_ An individual with $2,500 in earned income in 2007: Disqualified because income fell below the $3,000 threshold. No rebate.

_ A married couple with no children, with adjusted gross income of $100,000 in 2007: Would qualify for the full $1,200 couples. A $1,200 rebate.

_ A worker with one child, who earned $9,000 and owed no taxes in 2007: Would qualify for the $300 rebate available to individuals who pay no taxes but earned at least $3,000, plus an additional $300 for the child. A $600 rebate.

_ A couple with income of $145,000 in 2007, with three children: Would qualify for the full $1,200 for couples, plus $300 for each child. A $2,100 rebate.

_ A couple with income of $160,000 in 2007 with two children: Would qualify for a partial rebate, reduced by 5 percent for every $1,000 in income above the $150,000 threshold. An $1,800 rebate — $1,200 for the couple plus $300 per child — would go down by 50 percent for this family. A $900 rebate.

_ A couple with income of $200,000 and four children: Disqualified because their income exceeded $174,000, the phase-out limit. No rebate.

_ An individual with adjusted gross income of $23,000 and no dependents would get a rebate of $600.

_ A couple with adjusted gross income of $160,000 and two children would get a rebate of $1,300.

_ A couple with adjusted gross income of $184,000 and two children would get a $100 rebate.

http://news.yahoo.com/s/ap/20080125/...KWuMsW14OMwfIE

Originally Posted by kyswpgrl

Same here IF we are going to have to deduct it from next year's tax return. Yeah I could throw it into savings and earn some interest off of it, but the temptation would be strong to use it to pay off bills.

A $250 check is the equivalent of winning a tiny jackpot on a convenience-store lottery ticket. It’s not going to spur any lifestyle changes or fund any major purchases. This is why the history of the tax rebates — including the last time it was tried in 2001 — is a sorry one.

Most people aren’t stupid enough to think a $250 check improves their economic standing. This is keeping with the late economist Milton Friedman’s “permanent income hypothesis,” which said that people don’t change their spending habits based on small blips in their income. In short: You can’t fool people into thinking that they are richer than they really are.

So it is that research shows that most of the 2001 tax rebates were used to pay down debt or were saved. According to a study by University of Michigan economists, only about 20 percent was spent. This was a tiny stimulus at best, and if it was spent on common consumer goods — clothing and the like — probably went to imports from overseas.

It is a crumb thrown to the peons.