On February 8th, I voted to pass H.R. 5140, the Recovery Rebates and Economic Stimulus Act. This bill will inject nearly $152 billion into the economy this year and more than $16 billion next year by providing one-time tax rebates of up to $600 for individuals or $1,200 for couples, plus $300 for each child.
Under H.R. 5140, people earning up to $75,000 a year, and couples earning up to $150,000, will be eligible for full rebates. Those who earn more will be eligible to receive smaller checks. In addition, the bill will assist lower-income Americans, including retirees on Social Security and disabled veterans who pay no income taxes, by making them eligible for rebates of up to $300.
The rebates will be calculated based on 2007 federal income tax returns, which are due April 15, and rebate checks will be mailed in May.
In addition to tax rebates, the bill will help some of the roughly two million Americans in jeopardy of losing their homes to foreclosure by temporarily raising both the limit on Federal Housing Administration loans and the cap on loans that Fannie Mae and Freddie Mac can buy to $729,750. This will allow tens of thousands of homeowners to refinance unsustainable predatory mortgages into more sustainable, fixed rate mortgages.
The economic stimulus plan is not perfect. As enacted, it does not include some important benefits that I support like unemployment assistance and funding for low-income Americans who cannot afford their energy bills. Nonetheless, by providing cash to consumers and targeted tax relief to businesses seeking to invest in job growth, the stimulus bill will be an important step in relieving some of mounting pressure on American taxpayers and our nation's economy.
Broad Tax Rebates for Individuals and Families
Tax Cut for More than 130 Million Families.
This broad-based stimulus package will provide tax relief of up to $600 per individual and $1,200 per married couple, plus an additional $300 per child. Recovery rebate checks could be sent as early as mid-May.
Unprecedented Tax Relief for Working Families.
The measure provides $32 billion in tax relief for 35 million families who work but make too little to pay income taxes -- families who otherwise would not have been included in this recovery effort. More than 19 million of these are families with children. Americans who earned at least $3,000 in 2007 will get at least $300 per single and $600 per couple, plus a child tax credit of $300 per child. Tax rebates that include low- and moderate-income families are 24 percent more effective as stimulus than rebates that leave these families out. [Economist Mark Zandi of Moody's Economy.com]
Recovery Rebates to 20 Million Additional Seniors and 250,000 Disabled Veterans. The measure provides recovery rebates to anyone who receives at least $3,000 in Social Security income, self-employment income or veterans' disability payments (including payments to survivors of disabled veterans). The original House bill provided rebates to 13 million seniors. Residents of the U.S. territories will also receive the benefit.
Tax Fairness and Targeted Rebates
American families are struggling in the weakening economy. Family incomes and home prices are down as health care, energy, food, and education costs and mortgage foreclosures have climbed. No wonder American families falling behind on their bills and consumer confidence is at a five-year low.
The rebates will go to middle-income Americans and those aspiring to join it. The wealthiest taxpayers are not eligible for this relief. Tax relief begins to phase out above incomes of $75,000 for a single and $150,000 for a married couple.
Clarifies that undocumented workers cannot get recovery rebates.
The measure includes safeguards to ensure that undocumented workers will not obtain rebates. It requires that all people must have valid Social Security numbers to receive recovery rebates. Undocumented persons cannot hold Social Security numbers and will not be able to access a rebate.
Jumpstarting the Economy
Relief Helps Financially-Pressed Americans
Economists estimate that each dollar of broad-based tax cuts leads to $1.26 in economic growth. Congress will develop a plan of further assistance, which could include extension of unemployment benefits, Food Stamps, state and local assistance and Medicaid.
Helping Families Avoid Foreclosure
Increasing Affordable Refinancing Opportunities and Liquidity in Housing Markets. For 2008, the bill increases the FHA loan limits up to $729,750, to expand affordable mortgage loan opportunities for families at risk of foreclosure through the Federal Housing Administration. To enhance credit availability in the mortgage market, the measure includes an increase in the loan limits for single family homes from Fannie Mae and Freddie Mac from $417,000 up to $729,750 that covers loans made between July 31, 2007, and December 31, 2008.
Encouraging Business Investment
The bipartisan plan doubles the amount small businesses can immediately write off their taxes for capital investments made in 2008 from $125,000 to $250,000, for purchases of new equipment of up to $800,000 (from $500,000).
Bonus depreciation provides immediate tax relief for all businesses to invest in new plants and equipment by speeding up depreciation provisions, so that firms can write off an additional 50 percent for investments purchased in 2008.