DPC REPORTS
FACT SHEET | February 12, 2008
Congress Passes Stimulus Package to Help the Economy and America's Families
On February 7, 2008, both Houses of Congress passed H.R. 5140, the Economic Stimulus Act of 2008, by overwhelmingly bipartisan votes. In passing this legislation so quickly, the Democratic-led Congress has kept its promise to take action to respond to the economic downturn. While we recognize that there are structural problems in the economy that the short-term stimulus measure will not solve, H.R. 5140, will provide direct financial relief to those who need it most and are most likely to use it to jumpstart the slowing economy.
The legislation that the Democratic-led Congress has sent to the President will boost the economy with timely, targeted, and temporary measures to:
1)Put hundreds of dollars into the hands of millions of American families who will spend the money immediately to help reinvigorate the economy. The rebate has two components:
·$300–$600 rebate (or $600–$1200 for married couples).The rebate is based on a combination of qualifying income, gross income and tax liability. There is, for all eligible taxpayers, a minimum rebate of $300 ($600 for joint filers). The maximum rebate, which is based on tax liability, is $600 ($1200 for joint filers). Eligible taxpayers are those reporting: a) a non-zero tax liability and gross income greater than the sum of the basic standard deduction plus exemptions or; b) $3,000 of qualifying income, defined as the sum of net self employment income, veterans’ disability payments (including payments to survivors of veterans), and Social Security retirement and disability benefits.
The compromise legislation sent to the White House to be signed into law will provide stimulus checks to most Americans including seniors living only on Social Security and disabled veterans, as Senate Democrats proposed. Stimulus checks for the survivors of disabled veterans have also been added. These Americans are most likely to spend stimulus funds quickly – fulfilling the bill’s goal of increasing consumer spending and providing a short-term boost to the American economy.
State-by-state listings of the beneficiaries of the rebate, benefits to each state, and additional Social Security recipients and disabled veterans who may be eligible for the expanded benefit are available in Appendix A.
·$300-per child ChildCredit.If a taxpayer receives $1 of the income tax rebate and the taxpayer has children, the taxpayer will also receive $300 per qualifying child. To qualify, the child must be under age 17 at the end of the taxable year and meet certain relationship, residency, and support tests. This payment is refundable, meaning the recipient is entitled to the full child credit without regard to income tax liability.
2)Help families avoid foreclosure by expanding financing opportunities for Americans in danger of losing their homes because of the mortgage crisis.Thesefinancing opportunities would not only help families save their homes from foreclosure, it would stabilize neighborhoods rocked by foreclosures and declining house prices and provide an immediate boost to the housing sector and the economy.
The Economic Stimulus Act of 2008 will:
·Temporarilyincrease conforming loan limits. The stimulus package will increase credit availability in the mortgage market by effecting an increase in the loan limits for single-family homes from Fannie Mae and Freddie Mac to 125 percent of the area median home price (with a maximum of $729,750) on loans made between July 31, 2007 and December 31, 2008.
·Temporarilyincrease the Federal Housing Administration loan limit. Thestimulus package will expand affordable mortgage loan opportunities by temporarily increasing Federal Housing Administration loan limits to 125 percent of the area median home price (with a maximum of $729,750).
A state-by-state listing of 2007 foreclosures is available in Appendix B.
3)Promote job-creating business investments, particularly for small businesses.The stimulus package contains tax relief for American businesses to encourage them to make investments that will enable them to keep growing – and the requirement for investment this year will achieve the stimulus bill’s goal of injecting money into the economy right away.
The Economic Stimulus Act of 2008 provides for:
·Enhanced small business expensing. Small businesses account for almost half of our economy and create almost two-thirds of all new jobs. Providing small business owners with immediate tax relief gives them an incentive to invest and help jumpstart the economy. Accordingly, the stimulus packagewould increase the amount small businesses can immediately write off their taxes for capital investments made in 2008 from $125,000 to $250,000, and increase the purchase threshold to $800,000 (from $500,000).
·Accelerated bonus depreciation. Generally a trade or business must recover the cost of property over a specified period of years. The stimulus package would provide immediate tax relief for all businesses that invest in new machinery and equipment by speeding up depreciation provisions, so that firms can write off an additional 50 percent depreciation for investments purchased in 2008.
State-by-State Estimates of Tax Filing Units That Would Benefit from the Individual Income Tax Reductions in the Economic Stimulus Act of 2008[1] |
|
State |
Millions of Tax Filing Units |
Alabama |
2.0 |
Alaska |
0.3 |
Arizona |
2.5 |
Arkansas |
1.2 |
California |
14.7 |
Colorado |
2.1 |
Connecticut |
1.5 |
Delaware |
0.4 |
Florida |
8.3 |
Georgia |
3.9 |
Hawaii |
0.6 |
Idaho |
0.6 |
Illinois |
5.6 |
Indiana |
2.9 |
Iowa |
1.3 |
Kansas |
1.2 |
Kentucky |
1.8 |
Louisiana |
1.9 |
Maine |
0.6 |
Maryland |
2.5 |
Massachusetts |
2.9 |
Michigan |
4.5 |
Minnesota |
2.4 |
Mississippi |
1.2 |
Missouri |
2.6 |
Montana |
0.5 |
Nebraska |
0.8 |
Nevada |
1.1 |
New Hampshire |
0.6 |
New Jersey |
3.8 |
New Mexico |
0.9 |
New York |
8.3 |
North Carolina |
3.9 |
North Dakota |
0.3 |
Ohio |
5.3 |
Oklahoma |
1.5 |
Oregon |
1.6 |
Pennsylvania |
5.8 |
Rhode Island |
0.5 |
South Carolina |
1.9 |
South Dakota |
0.4 |
Tennessee |
2.7 |
Texas |
9.7 |
Utah |
1.0 |
Vermont |
0.3 |
Virginia |
3.3 |
Washington |
2.8 |
West Virginia |
0.8 |
Wisconsin |
2.6 |
Wyoming |
0.2 |
Source: U.S. Department of Treasury, February 8, 2008.
State-by-State Estimates of the |
|
STATE |
Billions of Dollars |
Alabama |
1.7 |
Alaska |
0.3 |
Arizona |
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- Erika Moritsugu (224-3232)