WASHINGTON (AP) Congressional officials say leading lawmakers and the Bush administration have reached a tentative deal on tax rebates of $300 to $1,200, plus business tax cuts, to stimulate the economy.And what about making the Bush tax cuts permanent?
UPDATE: AP News Alert:
WASHINGTON (AP) Congressional leaders and the Bush administration have reached agreement on an economic stimulus package that will give most tax filers rebates of $600 to $1,200.And the Bush tax cuts???
UPDATE 2: Via email:
WASHINGTON, D.C. – Congressman John Boehner (R-West Chester) issued the following statement announcing an agreement in principle on an economic growth package with Speaker Nancy Pelosi (D-CA):
“For the last two weeks, Congress and the Bush Administration have worked together to craft an economic growth package that will get our economy moving again on behalf of middle-class families and small businesses. Today, Speaker Pelosi, Secretary Paulson, and I came to an agreement in principle to bring a bill to the House floor so it can get to President Bush just as soon as possible.
“This agreement is a win for the American people. It will help to stimulate our economy in the most direct and effective way possible: by putting money back in the pockets of middle class families, and by giving employers incentives to create new jobs and grow our economy. Equally as important, this agreement contains no unrelated spending or tax increases – a Republican condition of support from the outset of our negotiations.
“We cannot lose sight of the fact that this agreement is only a short-term measure to deal with the unsettled economic situation. It is just as important to put policies in place to strengthen our economic competiveness and create more American jobs in the long-term. First and foremost, we should block the largest tax increase in American history looming in 2010. We also must lower our corporate tax rate, which is among the highest in the developed world, and finally end the arcane alternative minimum tax. And Washington finally needs to control spending and reform entitlements so we don’t leave a legacy of debt for generations to come.
“Many Americans correctly believe that Washington is broken. This agreement is one small step towards fixing it, and I’d like to thank Speaker Pelosi, Secretary Paulson, and our entire Republican leadership team for their work on this measure.”
Summary of the Economic Growth Package Agreement in Principle
I. Tax Relief for American Families:
Rebate Checks: The economic growth package will include rebate checks in the sum of two separate calculations, with an overall phase-out for those with adjusted gross incomes above $75,000 for a single taxpayer and $150,000 for married couples. Rebate checks will include a base amount determined by the greater of two options: (a) Income tax paid in 2007, with a maximum of $600 for a single taxpayer and $1,200 for married couples; or (b) $300 for an individual and $600 for a married couple, provided the individual or couple earned income of at least $3,000 in 2007.
A children’s bonus also will be included in the rebate check calculation. Anyone qualifying for the base amount also receives an additional $300 per child, with no cap on the number of children.
II. Tax Relief for Employers:
Bonus Depreciation: The economic growth package will provide for a 50 percent bonus deduction on new equipment in the year it is placed in service, with certain exceptions for equipment with a “long life.” This temporary tax cut offers significant savings on new property with a depreciation period of 20 years or less. This will give employers – particularly small businesses – greater incentive to invest and create jobs for more Americans searching for work. The temporary bonus depreciation, coupled with expensing measures enacted in May 2003, resulted in a four percent increase in business spending in the first six months alone.
Section 179 Expensing: This provision allows employers, including small businesses, to fully expense $250,000 in both new and used tangible property in the year it is purchased up to an overall investment limit of $750,000. This will provide a particularly strong incentive for small companies to invest in their businesses so they can continue to provide good-paying jobs for the American people.
Increase in Government Sponsored Enterprises (GSE)/Federal Housing Administration (FHA) Conforming Loan Limit: The conforming loan limits for both FHA and GSE (such as Fannie Mae and Freddie Mac) loans would be increased from $362,000 to $725,000 and from $417,000 to $625,000 respectively.
III. No Extraneous Spending/Tax Hikes
The agreement in principle includes no extraneous spending on unemployment insurance, transportation infrastructure, food stamps, and Medicaid. In a letter to Speaker Pelosi last week, Republican Leader Boehner and Republican Whip Roy Blunt (R-MO) asked that any extraneous spending and tax hikes be taken off the table. All have been dropped.
