As far as all this stimulus is concerned, if it is not paired with deficit reduction, Obama will be the biggest deficit spender in history.
The early consensus indicates that the spending will be geared toward direct checks for consumers, a tax credit for job creation and spending on public works such as school repairs, roads and bridges.
After the inauguration, Obama has proposed investing $150 billion over 10 years in clean energy and a fund to invest in manufacturing research, new job training programs and an infrastructure investment bank.
Other ideas we’ve heard is that Obama wants to let savers tap into the retirement plans without early-withdrawal penalties: He would Temporarily allow penalty-free early withdrawals from IRAs and 401(k)s of up to 15% of the balance but not more than $10,000.
He has suggested Temporarily suspending the rule that seniors, age 70 ½, take required annual distributions from their retirement accounts.
Give Temporary tax credit of $3,000 in 2009 and 2010 to companies for each new full-time employee it hires in the United States.
Require financial institutions participating in the bailout to put a 90-day moratorium on foreclosures for homeowners “acting in good faith.”
Let federal government lend to state and municipal governments to help counter the budget crunch faced by states due to the mortgage crisis.
Taxing Wealth
- Obama wants to freeze the exemption amount of estates free from the estate tax at $3.5 million — where it will be in 2009.
- Freeze top estate tax rate at 45%.
- Raise capital gains and dividend tax rates to 20% from 15% for couples making more than $250,000 and singles making more than $200,000.
With regard to income taxes, Obama has stated many times that he wants to raise income tax rates on those earning over $250k joint and $200k single to their pre-2001 levels of 36% and 39.6%. Currently they’re 33% and 35%.
Social Security taxes could also rise for high income earners. Currently if you earn over 102,000 you are no longer required to pay social security tax. That would continue for those who earn from 102k to 250k.
The SS tax is already 12.4%. You and your employer each pay half. We don’t know what the rate for those making over $250k will be at this time, but there is strong feeling that SS taxes will be rising for those who earn over $250k. Hopefully those paying in more will get some extra benefit for their investment.
It will be interesting to see if these added taxes will be a burden to the economy.
