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Fallout: The Financial Crisis

Senate focusing on tax cuts in stimulus

Sarah Gardner Jan 29, 2009
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Fallout: The Financial Crisis

Senate focusing on tax cuts in stimulus

Sarah Gardner Jan 29, 2009
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TEXT OF STORY

Steve Chiotakis: It’s round two for President Obama’s more than $800 billion economic stimulus plan. After a party-line vote in the House yesterday, the package makes its way to the U.S Senate today. There, tax cuts will be the focus, and some lawmakers want to make them heartier. Sarah Gardner has the latest.


Sarah Gardner: Both the House and Senate plans offer temporary middle-class tax cuts — the kind President Obama talked up during the campaign. A $500 break on payroll taxes for single folks making $75,000 or less, and a thousand bucks for couples earning under $150,000. The Senate version, though, includes another $70 billion to shield middle and upper-middle income Americans from the Alternative Minimum Tax.

Economist Joel Naroff:

Joel Naroff: It’s a tax that’s gone totally awry and really needs to be gotten rid of. Under these sets of circumstances, this is a middle-class tax cut.

The AMT was originally crafted to make sure the wealthy couldn’t deduct their way out of paying taxes. But critics say it now ensnares even some families making under a $100,000 a year because it’s not adjusted for inflation.

Still, Naroff and many economists believe the middle-class tax cuts in the stimulus package won’t quickly re-ignite the economy since so many Americans first have to pay off debt.

I’m Sarah Gardner for Marketplace.

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