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With the recent announcement of President Obama’s $787 billion economic stimulus bill, there are probably at least 787 billion different questions.  One of the top ones is “Will there be another economic stimulus check?“.  The answer is No, but…

Tax Impact

The President’s new bill takes a different approach to stimulus efforts.  Instead, the new economic stimulus bill will utilize tax cuts as one of many approaches to stimulating the economy.  Millions of US workers will begin to see about $52 extra per month in their paychecks, starting in June.  This is from a $400 tax credit that will be given out through the remainder of the year.

Couples will receive up to $800, or $104 per month.  For 2010, the tax credit would be right around $38.80 per month and $77.60 for couples per month, assuming the credit was spread out for the entire 2010 year.

Other key features of the bill that will directly impact you

The tax credits are just one of the many stimulus efforts included in the bill.  Others include:

• Sparing middle-income and wealthy tax payers from having to pay Alternative Minimum Tax.  AMT was designed 40 years ago and never adjusted for inflation correctly.
• Extension of the $1,000 child tax credit to more low-income families
• First time home-buyers who purchase homes before December 1st, would be eligible for a $8,000 tax credit
• People who buy new cars before the end of the year can write off sales tax
• Homeowners who make their homes more energy efficient can write off 30% of the costs, up to $1,500
• College Students (or parents) are eligible for tax credits up to $2,500
• If you lose your job and utilize Cobra to continue your coverage, the government will pickup 65% of the total premium for the first 9 months of coverage.

This is just a very few small highlights of the bill which covers health insurance, state funding, education, increased assistance for the poor, the environment, and law enforcement.

Will the economic stimulus bill work?

Will it work?  The jury is still out, and probably will be for some time. Although the initial reaction of the stock market didn’t make me feel real warm and fuzzy.  Regardless of whether it does or not, the bill will significantly increase our national debt.  How is that being covered?  By tomorrow’s tax payer.

Most forecasters expect the 2009 deficit to hit 1.6 trilliion dollars.  That is about 3 times the short fall from last year!  According to Fox business, “The national debt — the sum of all annual budget deficits — stands at $10.7 trillion. Or about $36,000 for every man, woman and child in the U.S.  Interest payments alone on the national debt will near $500 billion this year. It’s already the fourth-largest federal expenditure, after Medicare-Medicaid, Social Security and defense.”

The overall impact?  Hard to say, but most likely this will impact us, our children and our grandchildren through higher taxes and reduced government services (personally I think that’s a good thing).  The impact will also force additional borrowing from other countries.

What are your thoughts on the economic stimulus bill?  Do you think it’s a good thing?  When do you think we’ll start seeing any benefits, if any at all?  Share your thoughts by adding a comment!

Photo by: Lisa Brewster

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