Giving President Obama Some Credit

President’s First Hundred Days Producing Surprising Results for Domestic Agenda

by Mike Griffith, Staff Writer 

As with all other presidents, not everything that President Obama is doing is bad.  Some Republicans—not all, but some—refuse to give the president any credit for any of the good things he’s doing; for that matter, they refuse to admit that anything he’s doing is good. 

Now, I have my own beefs with most of President Obama’s domestic agenda, but it’s not all bad. 

For example, the stimulus bill that he recently pushed through Congress is not quite the monstrosity that some critics have claimed it is. 

In fact, it includes some very good provisions, especially in the way of tax cuts and tax credits, such as the following:

* For 2009 and 2010, a $400 per person tax credit for single taxpayers with a gross income under $75,000, and an $800 tax credit for married couples filing jointly with a gross income under $150,000.  For most workers, this will mean about an extra $50 per month in take-home pay.  No, that’s not a whole lot to some people, but to other people an extra $50 month is meaningful. 

* Extension of the Small Business Expensing Deduction (aka Code Sec. 179 deduction) to the end of 2009.  The 2008 Economic Stimulus Act increased the amount of Code Sec. 179 expensing for 2008 to $250,000 and increased the threshold for reducing the deduction to $800,000. Without the 2009 extension, businesses placing property in service in 2009 would have been limited to a $125,000 inflation adjusted maximum deduction with a $500,000 cap. 

* Increase in the small business stock sale exemption from 50% of gain to 75% of gain for all small businesses with assets under $50 million.   

* Alternative Minimum Tax (AMT) patch for 2009 and an increase in the AMT exemption amount from 2008 levels by $500 per person or $1,000 per couple.  (It’s too bad Clinton vetoed the repeal of the AMT that was sent to him by the GOP-controlled Congress, and it’s too bad that the Democrats blocked GOP attempts to abolish the AMT from 2002-2006, or we wouldn’t have to deal with these one-year patches.  Still, we can all agree that the extension and expansion of the AMT patch is a good thing.)

* One-time $250 payment to Social Security and other fixed income recipients. (My mom will appreciate this very much.) 

* Child tax credit increase.  The new law increases the refundable portion of the child tax credit for 2009 and 2010. The agreement does so by setting the income threshold at $3,000. 

* A five-year carryback of 2008 Net Operating Losses (NOLs) for qualified small businesses with average gross receipts of $15 million or less. The new law gives these businesses the choice to carry back NOLs three, four or five years.  

* First-time homebuyer tax credit: If you never owned a home in the last three years and your Adjusted Gross Income (AGI) is under $75,000/$150,000 (phaseout to $95,000/$170,000), and you buy a primary residence between Jan. 1 and Nov. 30, 2009, you get an $8,000 refundable tax credit, which does NOT have to be repaid if you hold the home for three years. 

* Tax deduction for buying a new car: If your AGI is under $125k/$250k (phaseout to $135k/$260k), and you buy a new car (not used car) under $49,500 after the law is signed until the end of 2009, you get a tax deduction for the sales tax. No deduction for car loan interest. Non-itemizers are also eligible for this deduction. 

* Expanded HOPE credit for education and renamed to American Opportunity Tax Credit, from $1,800 to $2,500 for the next two years.  

* 100%-plus increase in the transportation benefit tax deduction, from $120 per month to $230 per month for 2009 and 2010.  So if your job includes transportation cost compensation, the first $230 per month of that compensation is tax exempt. 

* One-year extension of the 50-percent first-year bonus depreciation allowed under the 2008 Economic Stimulus Act, retroactive to January 1, 2009. through December 31, 2009. The extension is retroactive to January 1, 2009.   

* Two-year extension of the additional year of bonus depreciation allowed under the 2008 Economic Stimulus Act for property with a recovery period of 10 years or longer, for transportation property (tangible personal property used to transport people or property), and for certain aircraft.  

* One-year extension of deduction for business vehicles.  The regular dollar cap for new vehicles placed in service in 2009 is raised again by $8,000, effective January 1, 2009. This increase mirrors the temporary 2008 cap increase. For 2008, the regular first-year depreciation dollar cap of $2,960 for autos was raised to $10,960 if bonus depreciation is elected ($11,160 for light trucks and vans). 

* Three-to-four-year extension of the Code Sec. 45 tax credit for electricity produced from renewable sources, such as wind. The stimulus bill extends the placed-in-service dates for qualified wind and other facilities under Code Sec. 45. 

* Removal of the credit cap for investment in wind energy production facilities.  The new law removes the credit cap of 30% for qualified small wind energy property. 

* $2,500-plus tax credit for qualified plug-in electric vehicles. 

* Expansion of tax credit for alternative fuel.  The new law increases the credit for alternative fuel vehicle refueling property for commercial and retail refueling stations for 2009 and 2010. The credit currently equals 30 percent of the cost of property placed in service at each location by the taxpayer during the tax year but is limited to $30,000.  The agreement increases the credit to 50 percent (capped at$50,000) for property placed in service in 2009 and 2010. For individuals, the credit is also increased to 50 percent (capped at $2,000).

This list does not include the worthwhile spending provisions in the bill, such as much of the infrastructure spending.  There aren’t a whole of them, but there are some. 

Yes, there is a lot of junk and waste in the stimulus bill, such as far too much spending on unnecessary projects, and most of the programmed spending doesn’t even start for a couple years.  Even worse, it repeals the 1996 Welfare Reform Act and takes us back to the days of rewarding states for increases in welfare rolls.  The bill also contains a back-door provision to expand federal control of our health care system.  And, it contains a brazenly anti-religious clause prohibiting federal funds to be used for renovating campus buildings that are used for religious purposes. 

I acknowledge all the negatives in the bill, and that’s why I would have voted against it.  However, that being said, the stimulus bill is by no means all bad.  It contains some helpful, positive provisions.

http://tax.cchgroup.com/Legislation/House-Senate-Recovery-Act-2009.pdf

 

http://thefinancebuff.com/2009/02/tax-cuts-in-stimulus-bill-updated.html

 

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