On February 7, 2008, the House of Representatives and the Senate agreed on and passed the seemingly embattled economic stimulus package. The bill that passed is relatively stripped down from what had been debated over the past several weeks. As passed, the package includes a combination of business tax incentives and the much anticipated tax rebates. The package is substantially similar to that which President Bush previously approved and therefore, we can assume that he will sign it when it reaches the Oval Office.
For businesses, the incentives include: a 50 percent bonus depreciation deduction on most equipment placed in service in 2008 and doubles allowable section 179 deductions for both new and used tangible property (for 2008 expenditures).
For individuals, rebates would be given to individuals in an amount of $600 per person and an additional rebate of $300 for each child. The rebates equal $1,200 for married persons. The rebates are not, however, for everyone. There is a gradual faze out of the rebates for taxpayers with gross income exceeding $75,000 ($150,000 for married couples). The bill would also send rebates to social security and veterans disability recipients.
The purpose of this package is to stimulate the economy. The best way for the package to work is for businesses to invest in new property and for individuals to spend their rebate checks in the private sector. Of course, the best thing for the individual may be to save the money or pay down existing debt. However, if you choose not to do the best thing for you, when you spend the money, you can always tell yourself that you are spending it for the good of the U.S. economy. Personally, I think I’ll upgrade my iPod.