The Advantages and Disadvantages of the Stimulus Package
Competition will be fierce for a piece of economic stimulus package pie. After all, this bail out is directly the result of a credit system in crisis from overextension of subprime lending. Too many American families are facing mounting piles of debt, job loss, and possibly the foreclosure of their home and business. Surveys of taxpayers show the expected uses of the tax rebate to be paying a bill/debt, beefing up a meager or depleted savings account, and spending it on a large item purchase. The U.S. federal government is issuing a tax rebate for most middle and low income Americans. Married couples receive the most at $1,200 dollars with a $300 dollar addendum per child. Individual tax filers receive $600 dollars and even those without a tax burden due to lack of income will receive up to $300 dollars in relief. It sums up to a considerable amount of disposable income available to raise the falling economy. The entire goal of the economic stimulus package is to encourage Americans to spend more money in small businesses. The majority of wholesale retailers are small businesses, privately owned with less than 20 employees. While this plan proves to be more advantages it still has its disadvantages for some Americans. President Obama has signed the $787 billion stimulus package into law with approximately 35% going towards tax cuts and the rest going towards stimulus spending. Just about everyone stands to benefit from the stimulus in some fashion in the short-term, but to a few demographics the opportunity to reap more gains than others are dim. Below I have listed a bulleted list of three groups of Americans who stand with an advantage or disadvantage from the current stimulus package.
1. Homeowners - Homeowners with a mortgage financed by either Fannie Mae or Freddie Mac are in luck because now, they can have their home loan modified into a, Government backed, 4% fixed rate mortgage. This is possible thanks to President Obama’s $75 billion "Making Home Affordable" plan, and here is how you can use it to your advantage. 2. Wage Earners & the Self-Employed - Wage earners and the self-employed are eligible for up to $400 a year for single taxpayers and up to $800 for couples filing jointly in both 2009 and 2010. If you are single, the credit starts to phase out at an adjusted gross income of $75,000. If you are part of a couple filing jointly, your phase out would begin at $150,000 of adjusted gross income. You are probably wondering when the check will arrive. It won’t. The IRS will begin reducing withholding taxes automatically at the clip of about $30-$40 a month. If you are self-employed, you can claim your credit when you file your return for 2009. 3. The Unemployed - Have you been laid off recently? Take some solace in knowing that the first $2,400 in unemployment benefits received can now be excluded income. Additionally, you may also be eligible for a 65% subsidy for up to 9 months if you stay on your former employer’s health insurance policy. You will also start to receive a $25 weekly increase in your benefit check. If you’ve been worried that your 26 weeks of unemployment benefits were almost up, you may now benefit from up to an additional 33 weeks through the end of the year. Your local unemployment office can provide further clarification.
Benefits for Homeowners
If you are a homeowner who have missed or been late on a few monthly mortgage payments, you can apply for, and most likely be approved, for a home loan modification. This will allow you to get a 4% fixed Government rate which will save the average homeowner hundreds per month just in interest payment savings. The plan only covers homes in which one family lives in. The housing bailout is not for homeowners with more than one family living in them. A homeowner can now, be approved for a refinance or modification even if they...
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