Obama pushes Capitol Hill on big economy rescue packageJanuary 6th, 2009 - 12:13 pm ICT by IANS
Washington, Jan 6 (IANS) Ahead of his inauguration, US president-elect Barack Obama has launched a campaign on Capitol Hill for a massive package of tax cuts and spending proposals aimed at reviving an economy mired in recession.Obama Monday met lawmakers from both majority Democratic and minority Republican parties, including House Speaker Nancy Pelosi, and Senate Majority Leader Harry Reid, as well as Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner.
Obama, who takes over from Republican President George Bush Jan 20, is also planning to propose roughly $300 billion in tax cuts for individuals and businesses in a major speech on the economy Thursday, media reports said citing senior Democratic officials.
He has not publicly put a price tag on his overall stimulus plan, though his advisers have said they expect it to fall between $675 billion and $775 billion, 40 percent of which would be in tax cuts.
According to an Obama spokesman cited by CNN, several tax breaks are under serious consideration. These include:
Middle-class tax cut: Obama would offer a tax cut equal to $500 a year for individuals and $1,000 for couples. The credit would work essentially as a payroll tax credit, meaning the money could be delivered fairly quickly. Companies could simply reduce the tax they withhold from employees’ pay cheques.
The tax credit is likely to be offered only to those below a certain income level, but the Obama team hasn’t specified where the cut-off point would be. The credit also would be refundable, meaning that even tax filers without any tax liability - typically very low-income workers - would receive one.
Business break for losses: Obama is considering a tax break for businesses that book losses in 2008 and 2009.
The stimulus plan may extend what’s called the net-operating loss carryback to five years, up from two years currently. The provision lets companies apply their losses to past and future tax bills so that they can get money back on taxes they’ve already paid or would otherwise have to pay.
Job creation: Obama would establish a new credit for businesses that either create jobs in the United States or avoid layoffs.
Small business write-off: Obama would increase the amount of expenses small businesses can write off to $250,000 in 2009 and 2010, up from $125,000 currently.
While political observers believe the now-added emphasis on business tax cuts as a major part of a stimulus package is one way the Obama team hopes to attract Republican support, that’s not how the Obama camp sees it, CNN said.
“We’re working with Congress to develop a tax-cut package based on a simple principle - what will have the biggest and most immediate impact on creating private sector jobs and strengthening the middle class.
“We’re guided by what works, not by any ideology or special interests,” an Obama spokesperson was quoted as saying in an e-mail to CNNMoney.com.
In his weekly radio and video address Saturday, Obama offered a broad stroke sketch of his proposal, which he called the American Recovery and Reinvestment Plan. In addition to a tax cut for workers, he said he would propose to:
* double renewable energy production and make public buildings more energy efficient;
* rebuild crumbling roads, bridges and schools;
* computerise the health care system; and
* modernize classrooms, labs and libraries.
“Economists from across the political spectrum agree that if we don’t act swiftly and boldly, we could see a much deeper economic downturn,” Obama said.