Obama Eyes $300 Billion Tax Cut - WSJ.com
To put that in scope:President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.
The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated, and may make it easier to win over Republicans who have stressed that any initiative should rely relatively heavily on tax cuts rather than spending.
Details:The Obama tax-cut proposals, if enacted, could pack more punch in two years than either of President George W. Bush's tax cuts did in their first two years. Mr. Bush's 10-year, $1.35 trillion tax cut of 2001, considered the largest in history, contained $174 billion of cuts during its first two full years, according to Congress's Joint Committee on Taxation. The second-largest tax cut -- the 10-year, $350 billion package engineered by Mr. Bush's in 2003 -- contained $231 billion in 2004 and 2005.
So the main thrust of Obama's plan is a slightly bigger version of the $600 checks that Bush sent out earlier this year.The largest piece of the overall tax relief would involve cuts for people who pay income taxes or who claim the earned-income credit. It would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, providing a credit to offset Social Security and Medicare payroll taxes of $500 per individual or $1,000 per family.
This part sounds a bit strange:
So companies that lost money are rewarded, while companies that were prudential aren't? This is getting to be something of a theme.As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. In effect, this would entitle companies to receive cash from the government that they otherwise couldn't have claimed.
$200b for Medicaid? Brilliant.But Republicans are already criticizing parts of the package. Senate Minority Leader Mitch McConnell (R., Ky.), speaking Sunday on ABC's "This Week," questioned one of the biggest pieces of the plan, which would send as much as $200 billion to state governments largely to expand the federal share of Medicaid, the health program for the poor.
Mr. McConnell suggested structuring that aid as a loan, saying this would encourage the states to "spend it more wisely."