comments
2008 Tax Stimulus Package: Senate & House Differences
 Print
|
If you’ve been following the latest on the economic stimulus package (or tax stimulus package), you’ve probably learned that we’re all waiting on the Senate to approve a bill that is similarly worded to the House’s H.R. 5140, the Recovery Rebates and Economic Stimulus for the American People Act of 2008 (great bill name!). Rather than outline the Senate version and assume you’ll be able to tell the difference, let me just explain the differences.
Incidentally, the latest news is that Senate Democrats can’t get the 60 votes necessary to move past debate (a step known as cloture) on the bill they’ve outlined so a vote will likely have to wait until next week – if ever. If things stall, they will accept the House version.
Latest news is that the Senate has passed its version of the bill, explained below!
Biggest Differences:
The biggest difference is in how the rebate amount would be determined. In the Senate version, individuals would get $500, couples would get $1,000, plus $300 per child with no income cap. The House version was $600 to individuals, $1,200 to couples, plus $300 per child but included caps at $75k for singles and $150k for couples. The removal of a cap also means that two large categories overlooked by the House’s plan would now get a tax rebate: retirees living on Social Security (~20M) and veterans dependent on government benefits (~250k). Those two groups are left out of the House plan because they didn’t meet the income tax paying qualifications.
Some other differences are that the Senate version would extend unemployment benefits an additional 13 weeks beyond the current limit of 26 weeks (something House Democrats tried to get but dropped in negotiations) and it would drop the increase on the dollar limit of conforming mortgages insured by Fannie Mae and Freddie Mac. (This was ultimately removed from the bill the finally passed the Senate)
There’s been talk about how if the Senate isn’t able to reach an agreement soon, that they’ll defer to the House’s bill. I personally think that including retirees and veterans, those missed by the House version, is crucial but the lack of a cap starts giving a money to folks who don’t really need it. While this is about stimulating the economy, I think a greater percentage of the stimulus would get spent if it were given to those on the lower end of the earning spectrum.
Thoughts?
{ 41 comments, please add your thoughts now! }
Related Posts
 By Jim |
 Stumble It! Bookmark reddit.comTags: 2008 Tax Stimulus Package, Taxes Jan 31, 2008 | Read more in Taxes |
Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.
Great work publishing these details!
It seems terribly wrong to overlook retirees and veterans. It also seems like there should be a cap, but I think you could argue that $75K salary isn’t very much in certain parts of the country. I think a higher cap and including the retirees and veterans would be the way to go.
Or just not do this at all- I think that is the better option, though not as popular.
It depends on your point of view. If you are looking at a government “giveaway” then including seniors and veterans is the right thing to do (as an aside, I find it ironic under the House plan that people who pay no taxes can get a “rebate” anyway – how is it a “rebate” ???).
But I think the more fair thing is to give people who paid the money into the system in the first place a chance to get some of it back.
Otherwise, you have a grand redistribution of wealth (= socialism).
I think instead of “giving” you mean “letting them keep”.
Everyone should be buying the stocks of Alcohol and Tobacco companies, I bet their earning in the quarter that the rebates get handed out will be THROUGH THE ROOF!
All jesting aside, I would really like to see some weekly stats on sales of ’sin’ companies like the gaming industry, alcohol, and tobacco companies. It would be interesting to see how many have elevated sales that week and the next.
I am happy about that because it means I get money that I wouldn’t have gotten. However, I would probably save the money instead of spending it.
The original package is probably better for stimulating the economy.
Is thinking both options are stupid an option? I’d stand to get $1800 or $1600 from the House or Senate versions, respetively. They need to considder 2 simple things.
1) Give money to people who are going to spend it.
2) Don’t encourage people to not work.
My AGI is about $75k and i think I shouldn’t get anything. No way would I spend it (and I’d argue that most reading are thinking about where the’d invest or save at least some of it). So, here’s the JRich stimulous package
1) 600/1200/300 (like the house)
2) phased out after $30k (to $40k) individual or $60k (to $80k) family
3) no extended unemployment benefits becaseu that is retarded.
4) include people with no earned income (incl. retirees) but include that in the income limits.
5) include people only on social security and don’t limit it by people not making enough income
The point is, its not about who has earned it or not. Its an ecomomic freakin’ stimulus package. Its about getting money in the hands of people that are going to spend it.
I don’t qualify for either package but I’d be willing to sign a pledge saying that I promise to spend the money. Hell, I’d even sign a pledge promising to spend the money on *American* merchandise. Would an Xbox 360 count?
Seriously though, I think the whole stimulus package idea is a silly one. I think they would do much better to focus on the roots of the problem rather than wasting a ton of borrowed money on a very temporary fix.
I agree with JRich about the two points to consider.
The thing to consider, though, is that even if people won’t spend the money directly, and invest it instead, this still gives indirect jolts to the economy. The companies you invest in now have increased cash flow to do what they do best, which is also spend.
The government also spends money, which it would have done with the money that it is planning on giving back to all of us; however, the biggest difference is that the government can simply print more money or borrow more to do its spending, whereas most consumers will not be able to borrow more to do their spending.
i’m not sure the arbitrary numbers of $600/$1200. the stimulus plan is about 1% of our economy, which begs to reason how that would do anything.
I like the idea of getting back some of what I put in. However I dont think that people making $300,000.00 need more, Yet the vets do. Leave it at 600/300 give to s.s and vets and leave out the higher class. Simple as that. Dont need to be a rocket scientist to figure this out. Believe this some of mine will go to bills and the rest on a nice new Plasma TV so that I can catch up with the rest of the world!! Have a nice day.
I think the whole tax rebate thing is pretty stupid and nothing but election year politics. This is not an efficient way to help jump-start the economy.
Anyhow, I am one of those people who would not get a dime in the House version. Yet I paid several hundred thousand (you heard me right) in federal taxes in 2007. How is it that I should be left out of the rebate? The point of the rebate is not to determine who is worthy? It’s not about giving money to people who need it. Someone making $75K does not “need” another $1000. Sure, it might be nice, but its money nobody was counting on in order to feed and cloth themselves. I’m pretty sick of this whole “need” question. Unless you’re living below the poverty level, you don’t “need” a rebate.
The idea was to rebate the money to people who will spend it. Well, I will spend it. I already save enough. I’m already wealthy enough. If you hand me $1000 or whatever and tell me to spend it, I am not going to run over to the bank deposit it. I’m spending it! Better yet, how about handing me back my entire tax bill, and I promise to run right over to the Bentley dealer. Deal?
This stimulus package is like a band-aid on a chest wound. It does nothing to solve the underlying problem and actually makes it worse! Our deficient is out of control and we keep going to the global bankers in China, Japan, and other countries to bail us out. What happens when they want their money back? We need to seriously halt all this spending and figure out a plan for the future that requires an overhaul of all our current programs; medicaid, medicare, social security, and all the other programs. The truly poor aren’t getting help, and the lazy members of society are benefitting the most from programs designed for the needy. As for the house versus the senate bill; let’s pick neither. Just lower the overall tax rates so we can all decide how to save or spend our own money.
Don’t try to cut ones blessing off just because you are not in the running for a rebate…If you make that much and already have some save then you don’t need to take that 1,000 and spend it take a 1,000 out your bank account and spend that.
I am one that needs it and really looking forward to spending it after I pay my tithes. I am osorry you are not in the running however if you were I would be happy for you. It wouldn’t be stupid if you were getting a rebate check but now it is stupid
@8:18 – The govt really has no business giving a rebate to anybody. It is simply political pandering. If the idea is for people to SPEND the money freely, then by that logic, it should go to the two economic extremes – the poor and the rich. The poor will spend it because they need to. The rich will spend it because… well… because saving a $500 – $1500 is not going to make much difference to them, so they’ll spend it. It’s the folks in the middle who will try to screw things up and save it, especially people who read personal finance blogs. Those party poopers should get no rebate at all (half joking in case its not obvious).
Seriously though, you are forgetting the fact that high income people pay more than their fair share of taxes. Its something like the top 20% pays like 80% of all the income taxes (forgive my numbers but it’s definately in that magnitude). It would be unfair to stiff ANY bonafide taxpayer on a TAX REBATE program. If you pay taxes, you should get a rebate. That would be fair. It’s not for you or the govt to decide if I need it or not. The govt took a bunch of my money and if they are giving some back to people, then they should give it back equally (preferably in the same proportion you paid).
If you’re looking for a welfare handout, well then that’s another conversation altogether.
You did not mention head of household. Secondly, what if I have a dependent child in college, does that count?
This is my first visit here. I enjoyed reading more details about the Stimulus package. I agree that it should include every legal tax-paying citizen. In the last tax rebate a few years ago that President Bush initiated, we didn’t get a check from the government. I believe it was because we file self-employed, and only had to pay the self-employment tax (SE), and ended up not owing a federal tax. To me, paying the SE is the same as paying the other taxes, and we had to file all the forms just like everyone else.
Do you have any information (or maybe an educated guess) about whether we would receive a check with this current Stimulus package? I believe you said the Senate passed the package, and it would include the seniors and veterans. Are all filers included? I wasn’t sure if you had that info in your article….thanks for getting the news out here for the public. I’ll definitely be back to read further.
I just want my money. Can we please just get rid of the IRS? Please. I want MY money.
According to the latest statistics published by the IRS, the top 25% of income earners pay 86% of federal income taxes (up from 84% in 2000). The top 50% pay 97%.
I think it’s more than a little humorous to call it a tax “rebate”. The only people who will be eligible for the rebate haven’t paid any income taxes!
This is just another way for the government to play Robin Hood. If they want to have a real effect on the economy, make Bush’s tax cuts permanent.
And for those of you who think Bush’s tax cuts were just “tax cuts for the rich”, think about this: when Bush took office in 2000 — before the tax cuts — the top 1% were paying 37% of federal income taxes. Now, after the tax cuts “for the rich”, they’re paying 39%. Think about that.
It concerns me that people are treating this like “free money,” you will see the hit for this while doing your 2008 taxes, be sure!
An amount that low per family is going to do little to assist individuals/families facing foreclosure or serious credit card debt, which are two factors that are DRIVING us toward recession!
With the cost of gas/heat this winter, I wish they would sign my check over to the oil companies/Bush family immediately. Eliminate me as the middle man.
Anyone seen the tally on our national debt lately? How’s Social Security doing? Thank god we can afford to throw money around…
We stand to get $2100/$1900 depending on which bill passes. You can bet I will be spending it. Mostly on home improvement. I like the idea of including retirees and vets. However, I hate the idea of giving money to the rich, or even the very poor who get $5000-$6000 in tax “rebates” anyway. They just waste it and now we will add more? My husband and I pay taxes, we have 3 children, and a nice house and vehicle. That takes money. While my ex-husband lives in a camper on a campground with 6 kids and gets more than $6000 at tax time and drives a cab, paying no taxes at all. Nor does he pay child support. I love the idea of this stimulus plan, but, there needs to be some common sense used. Give money to the middle class that carries everyone elses taxes. The rich seem to find all the loopholes and the poor pay nothing and get tons back. We pay and pay with little on our returns. I think, both plans need re-evaluating.
WELL THE NOON NEWS WAS SLAP IN THE FACE FOR SENOIRS AND VETS.
NO CHECKS IN THE MAIL FOR US.
WE ARE IN NEED OF THE EXTRA MONEY.
FROM WHAT I HEARD, THE REPUBLICANS VOTED AGAINST US. SO WHAT DOES THIS SAY TO THE VOTERS.
THIS TRUELY IS A SAD DAY FOR THE OLDER AMERICANS.
They need to be reducing our national debt by stopping some of the benefits especially those given to none citizens. All this will do is increase our debt. and make things worse for our children and grandchildren.
“Give money to the middle class that carries everyone elses taxes.”
Guess you diddnt read the post above!
There appears to be some misinformation out there on this new bill, as to earned income, phase out income and the year it applies.
The following is the relevant portion [with my bracket added for clarification] for individual income taxes.
“IRC code section 6428
In General- In the case of an eligible individual [those receiving at least $3,000.00 from earned income, OR SSB, OR a distribution from a qualified deferred accounti.e. pension, IRA], there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2008 an amount equal to the lesser of–
`(1) [2007] net income tax liability, or
`(2) $600 ($1,200 in the case of a joint return).
Special Rules-
`(1) IN GENERAL- In the case of a taxpayer described in paragraph (2)–
`(A) the amount determined under subsection (a) shall not be less than $300 ($600 in the case of a joint return), and
`(B) the amount determined under subsection (a) (after the application of subparagraph (A)) shall be increased by the product of $300 multiplied by the number of qualifying children (within the meaning of section 24(c)) of the taxpayer.
`(2) TAXPAYER DESCRIBED- A taxpayer is described in this paragraph if the taxpayer–
`(A) has earned income of at least $3,000, or
`(B) has–
`(i) net income tax liability which is greater than zero, and
`(ii) gross income which is greater than the sum of the basic standard deduction plus the exemption amount (twice the exemption amount in the case of a joint return).”
[Bottom line is you get $300 (or $600) plus the child credit, if you are eligible person EVEN if you didn't pay taxes or didn't have taxable income.
The phase-out is based on "AGI" for the 2007 tax year- NOT on taxable income, NOT on earned income. See below]
“Limitation Based on Adjusted Gross Income- The amount of the credit allowed by subsection (a) (determined without regard to this subsection and subsection (f)) shall be reduced (but not below zero) by 5 percent of so much of the taxpayer’s adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return).”
Good luck to all.
David R. Juneau
I guess there is phase out after 150 K and if you earn 174 K and above you will get 0 dollars. so no $$$ for me.
I am not getting any $$ because Senate version (original) got rejected just by 1 vote. I held repulibcans responsible for this and I am not voting to reps in my life.
Your comment, ‘but the lack of a cap starts giving a money to folks who don’t really need it’ is not well thought out. For those of us just above the cap, with children and a mortgage, we can certainly use the rebate. After all, if we made more money than those included in the rebate, didn’t we also pay more taxes than they did?
No matter which way you look at it, my family, and many other middle income families like mine, got the short end of the stick.
There are two sides to any story or situation. The rich pay more in taxes but yet the value of a dollar means less to them because of the quantities they have. The poor want more money but pay little to no taxes and you have the good ol’ middle class families that make it pay check to pay check. You can deduce by common sense or a lack of mental capacity that this bill will be good or bad. You can only expect the outcome but can not guarantee it. If you know the future then holler back because I have some gambling to do.
In closing, I want my money. Show me the money!
So, what is the criteria for how much you get EXACTLY? What I mean is, for example, in 2007 I was filing single with no dependents. Should be $600, right? I just had a newborn baby in January of 08, so my $600 wouldn’t go as far. Is the government using my tax returns in 07 as the guideline? If so its as if I’m being penalized for the fact that my child was born in 2008. My child will be alive and on earth for 355 of the 365 days of 2008, AND will be one who will benefit from any potential government check that I get, so I hope that someone in my situation would get the whole $1200. Theres alot we haven’t been told about this yet, so I hope we can get some answers soon. I work hard for my $30K a year, and there is a HUGE difference between $600 and $1200 for me.
I take issue with those who imply that the majority of the families in the lower end of this income range would use the rebate in the “sin” industries such as alcohol, tobacco, and gaming. My family and most military families we have known have been in the lower income range for years and our money doesn’t go to those kind of products. You should be careful about stereotyping lower income families.
All this will do is send money to China and stimulate their economy. Is it really a rebate when the Fed is deficit spending already? Should we be signing IOU’s to receive it?
If we really want to stimulate the economy, use the money to build roads and the other crumbling infrastructure. I about fell out of my seat when I heard Jesse Jackson say he was against the package and thought the money would be more effective if spent on rebuilding Interstate 95.
To better stimulate the economy and reward prudent hard working Americans who, unlike a lot of Americans, who did not pay any taxes, and will be receiving this tax rebate, I propose the following tax stimulous plan.
Allow a 1 year morotorium on all federal taxes due on withdrawals from 401K, and non traditional IRA’s. This would allow the withdrawal of some of the person’s 401K, and or IRA money tax free for that year. The money would then go into the economy via purchases, or if not, the withdrawal would be deposited to some form of income producing product, thus creating more taxable income to the saver, and more money to invest into the economy.
If inacted into law I would be highly motivated to spend down my 401K, and or IRA prior to my minimum required age of 70.6 years as is now the law. And I believe millions of other Americans would also be so inclined to do the same.
This has the result of rewarding the prudent working / saving American with some tax savings, instead of just the same old redistribution of the wealth as seems to be the case in Washington these days.
If you are carrying a child over 17, who is in college, as a dependant, will you get any type of refund for that child?
What I find terribly disturbing is that I have a 16 and a 17 yr old AT HOME in high school and the 16 turns 17 BEFORE the end of the year. That means that I have 2 children that do not qualify for the rebate, yet what they cost for me to raise takes both my husband and my salary to do so. AND our salaries combined hit at 172K which means we will only qualify for a $98 rebate. Yet they withheld over $32,000 in taxes. I usually don’t complain about fairness, but….
I live in a senior building,and we have already been contacted for help filling out the paperwork for a fee.
What I would like to know is if there is a form or forms that need to be filled
out, where can they be picked up or downloaded.
Even though I am 69 years, as a retired accountant I think I would be able to fill it out myself. As a senior I am on a fixed income, and spendng $10.00
for some on to fill out a paper for me. Money that I could use to buy food
or pay a bill does not appeal to me.
I would appreciate it If you know where I can get one or some of the forms, so I could give them to some of my neighbors, and help for free those who are unable to fill them out.
Thanking you in advance for any help you can give me.
my goodness gracious, not being able to support 2 teens on 174K a year, thats ashame. Try raising 2 teens on 40,000 like i do… we are perfectly healthy, happy and rich in other ways. my fat rebate will go right into savings after our backpacking trip that costs us zero save for a few bucks on gas.
Check this site on who pays what amount of taxes.
http://www.ntu.org/main/page.php?PageID=6
Maybe the rebates should be all differant depending what they contributed?
I agree ANON. $172k with kids at home.. I make it just fine with 2 kids and a Grandbaby at home with less the half of that income.
I DISAGREE WITH GIVING OUR MONEY AWAY TO THESE COMPANIES. THE GOVERNMENT NEEDS TO GO TO THE ROOT OF THE PROBLEM. MOST PEOPLE THAT ARE WORKING ARE HAVING A TOUGH TIME PAYING THEIR BILLS AND IF THEY COULD GET AHEAD, MONEY WOULD BE SPENT. THE MONEY THEY GAVE TO THESE COMPANIES SHOULD HAVE BEEN GIVEN TO THE WORKING PEOPLE TO PAY FOR THEIR CREDIT CARDS AND HOUSE PAYMENTS. IF THE WORING PEOPLE COULD PAY ALL OF THEIR BILLS OFF, THESE COMPANIES WOULD NOT NEED BAILING OUT. THE MORTGAGE COMPANIES WOULD GET THE MONEY THEY NEED AND SO WOULD THE CREDIT CARDS. THIS WOULD FREE UP SPENDING MONEY FOR THE WORKING PEOPLE. IT WOULD WORK LIKE CLIMBING A LADDER. THE MONEY WOULD BE PASSED FROM THE WORKING PEOPLE TO THE COMPANIES THAT ARE IN TROUBLE. AS FOR THE STIMULUS PACKAGE, YOU TELL ME WHAT $500.00 IS GOING TO DO FOR US? THAT WILL NOT BUY THESE THOUSAND’S OF PEOPLE A JOB THAT ARE OUT OF WORK. THAT WILL NOT MAKE THEIR HOUSE PAYMENT UNTIL THEY FIND WORK. THESE SMALL CHECKS THAT THEY ARE SENDING OUT IS A JOKE. IF YOU WANT THE ECONOMY STIMULATED, PUT THE MONEY WHERE IS CAN BEST BE USED. IF THEY WOULD LOWER HOUSE PAYMENT OR SEND PEOPLE ENOUGH MONEY TO PAY SOME BILLS, PEOPLE WOULD MAYBE THEN HAVE A FEW DOLLARS TO SPEND. I KNOW THAT A LOT OF PEOPLE OWE ON CREDIT CARDS, BUT WHEN YOU DON’T HAVE A JOB, THE MONEY HAS TO COME FROM SOMEWHERE TO PAY YOUR BILLS.
This comment is about what Steven said.
Steven
January 31st, 2008 at 5:13 pm It depends on your point of view. If you are looking at a government “giveaway” then including seniors and veterans is the right thing to do (as an aside, I find it ironic under the House plan that people who pay no taxes can get a “rebate” anyway – how is it a “rebate” ???).
My husband and I are on SSI, we don’t work because of severe medical conditions and we pay taxes on gas, food, and just about everything that we buy. We also pay property tax, we do pay taxes, but we are not allowed to get any money that we put back into the government. We worked as much as we could when we were younger, but just not enough that they put us on SSI. We do not use the system, or abuse the system but we don’t get any help. We pay our mortgage every month, never went through a foreclosure and pay our bills too on our $11,000 a year income remember we have to pay insurance on both house and car and we are running out and do not want to loose everything but we should get some money back because of all the interest and taxes on everything that we buy and such.
And sherry was right, help us pay our bills and then the companies would not have to have money given to them. All I would like is a loan that I could pay off, stop using credit and get those bills paid off and just pay one loan off, we have done it before I know we could do it again and just tear those credit cards up!
I am disabled and only get $883 per month and that’s it !!! So I guess people like me that get social security disability shouldn’t get any stimulus because we don’t pay anything in ? But people like me shouldn’t get any help because its our fault for having a physical handicap. And NO I can’t work part time because social security won’t let me. If I work part time social security says I will get totally cut out. That means I lose all medical benefits and income. I am not able to work full time but I might be able to work 20 hrs a week IF social security would let me. Social Security gives a trial period to go back to work but they will not allow anyone to work part time to have extra income. If you can work part time for a certain length of time then social security considers you not disabled anymore. So just because I can’t work I shouldn’t get a stimulus check ? Its not my fault !
I truelly believe the largest problem we have is allowing all of our companies to move over seas.And all the products we have is made in China,Thailand,Mexico etc. Then we allow all the Hispanics to take our jobs and pay them welfare,And all the gas stations are ran by WHO not americans. The stimulous package is a joke. 500,1200 what is the difference it isn`t going to help. It may keep your house for a month longer or your car for 2 months. If our goverment would stop companies,banks,oil companies etc from increasing the cost for extreme profit.Stop companies from leaving the U S we would be in good shape. But as of right now we are in bad shape all of us even the so called rich.You may have it now but what will happen when everyone else falls. You will gradually be right beside the poor. And blamming everyone else but ourselves like we are doing now….Thank You
I received two stimulua payment..but don’t know where to return one. Can you help me.