Obama: Broadest, Quickest Tax Cuts Ever
It took only weeks for the notoriously slow Congress to pass the $787 billion economic stimulus package. President Barack Obama signed it into law less than one month into his presidency.
So when should most people hope to start seeing the benefits of tax cuts in it?
By April 1, according to the president.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Mr. Obama said Saturday in his weekly radio and Internet address.
The president said his signature two-year "Making Work Pay" tax break will affect 95 percent of working families, and, in six weeks' time, a typical family will start taking home at least $65 more every month.
Taxpayers won't get a separate check mailed to them like many did with last year's one-time payment designed by the Bush administration to help boost the economy.
Instead, Mr. Obama's credit - up to $400 credit for individuals and up to $800 credit for married couples - is to be doled out through the rest of the year through paychecks. Most workers are to see about a $13 per week increase in their take-home pay. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year.
People who do not earn enough money to owe income taxes are eligible for the credit, an attempt to offset the payroll taxes they pay.
But the credit is phased out for higher-income taxpayers, defined as individuals who have a modified adjusted gross income of between $75,000 and $95,000, and married couples filing jointly who make between $150,000 and $190,000. Thus, the administration says many of them will see little or no change in their paychecks.
With employers and payroll companies responsible for making the necessary changes, no worker has to fill out a new W-4 withholding form or do anything else to get the credit. The Internal Revenue Service, however, is suggesting that individuals and couples with multiple jobs submit a revised withholding form to be on the safe side. And, it's always a good idea for people to keep a close eye on pay stubs to make sure their money is included.
In concert with Obama's announcement, the Treasury Department on Saturday began directing employers to reduce the amount of taxes withheld from people's paychecks in accordance with the new law as soon as possible and not later than April 1. The IRS also released new withholding tables on its Web site to help guide employers in reflecting the new credit. It says more instructions about tax provisions in the law will be available next week, and will be mailed to more than 9 million employers next month.
"We have the wheels turning to deliver much needed boosts to the paychecks of working Americans," Treasury Secretary Tim Geithner said in a statement.
Mr. Obama's expensive and ambitious package of federal spending and tax cuts is designed to revive the economy and save or create 3.5 million or more jobs. It aimed to inject a sudden boost of cash into transportation, education, energy and health care, while helping recession victims through tax cuts, extended unemployment benefits and short-term health insurance assistance. It also will add to a rapidly growing national debt.
The president signed the measure into law Tuesday.
In his weekly address, Mr. Obama said he was grateful to Congress, governors, mayors and all the people who supported the measure.
Still, he added: "It is only a first step on the road to economic recovery. And we cannot fail to complete the journey." He said the country also must stem foreclosures, repair the banking system, get credit flowing again and revamp financial industry regulations.
And, even as he promoted the record-breaking spending plan, he called for doing what's necessary to control "exploding" deficits as the economy begins to improve.
Mr. Obama is holding a bipartisan "fiscal responsibility summit" at the White House on Monday to talk about ways to control the trillion-dollar budget deficit. The next day, he is to address a joint session of Congress, a speech expected to focus heavily on the economy. On Thursday, the president will send a budget request to Congress "that's sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't and restoring fiscal discipline."
Republicans are certain to hold him to that.
In the GOP's weekly address, Rep. Dave Camp of Michigan, the top Republican on the House Ways and Means Committee, said his party wants to work with Mr. Obama to solve the country's economic problems "in a responsible way that does not burden our children and grandchildren with a mountain of debt."
"We can't borrow and spend our way back to prosperity," Camp said. "If he is serious about dealing with the tough issues and getting spending under control, his budget will show it."
By Associated Press Writer Liz Sidoti