President Obama has proposed an economic stimulus tax cut package for 2009 which contain about $275 billion worth of tax cuts to individual tax payers as well as businesses. The big question is – does this package contain a stimulus check in 2009? The idea behind this money is to promote individual spending as well as business spending and job creation. The large amount of the tax cuts is partially due to the need to get Republican support for stimulus package.
Is there a stimulus check in 2009?
There will be a stimulus check in 2009 for selected groups – however there won’t be a blanket check for all taxpapers like there was in 2008. However – the year isn’t over yet and the economy hasn’t recovered so don’t give up hope – the stimulus check could happen this year.
What is an economic stimulus package?
In 2008 the government sent out economic stimulus checks to 130 million Americans with the idea that this money would be spent on consumer goods and services thereby stimulating the economy. Most economists think that this program was not successful because too many people either saved their stimulus check or paid down debt. Regardless, the economy has slowed down into a recession with the possibility of a depression which has increased the motivation for another stimulus package.
Individual tax cuts
Obama has proposed tax cuts of $1,000 for couples and $500 for individuals. This would apply to individuals with a maximum income of $75,000 and households with a maximum of $150,000 in income. This is similar to a stimulus check except you would receive this amount over time rather than all at once. The idea behind tax cuts for individuals is to promote spending which will increase economic activity. More economic activity is good for the economy and will help fight off the recession.
Business tax cuts
Here are some of the proposed business tax cuts:
- Tax credit for companies that avoid layoffs or make new hires. I would assume that if they have offsetting layoffs and new hires they wouldn’t get any credits.
- Allow companies to write off losses from 2008 and 2009 to retroactively reduce tax bills from the last 5 years. Normally these companies would only be able to write off the losses on current or future tax bills.
- The tax write offs would be effective from Jan 1,2009 so any expenditures since then could be included in the tax loss.
Second economic stimulus check
At the moment Obama has not proposed a 2009 stimulus check like the one that was sent out in 2008.