By April 1st, most workers will see a reduction in taxes withheld due to the $787 billion economic stimulus package, but unfortunately, the extra $65 a month for a family of four isn’t going to go very far.[social_buttons]
It’s certainly not going to make the payment on a new car or house, but tax breaks on those purchases are also being touted as an important part of the stimulus package. And it’s not going to keep your mortgage payment current.
Other tax breaks, for parents of college students, might help those who are eligible and willing to go to school, but based on the number of underemployed college graduates we have in the US right now, I find it hard to believe that these credits are going to have a lasting impact on most families or on the economy. Besides, you still have to come up with tuition, books, room and board for those students. How is that going to help, unless you sell text books or rent apartments to students?
Perhaps the most effective part of the stimulus package tax credits for families will be for homeowners who add energy-efficient windows, furnaces, water heaters, and air conditioners. They can get a tax credit to cover 30 percent of the costs incurred, up to a total of $1,500. Even with this credit, you have to come up with the other 70%, and you do have to own the house. Not much help for the renters…
The Stimulus Package numbers, straight from Recovery.gov:
$288 billion … Tax Relief*
$144 billion … State and Local Fiscal Relief*
$111 billion … Infrastructure and science
$81 billion … Protecting the Vulnerable
$59 billion … Health Care
$53 billion … Education and Training
$43 billion … Energy
$8 billion … Other
[* Where “Tax Relief” includes $15 billion for Infrastructure and Science, $61 billion for Protecting the Vulnerable, $25 billion for Education and Training and $22 billion for Energy, so total funds are $126 billion for Infrastructure and Science, $142 billion for Protecting the Vulnerable, $78 billion for Education and Training, and $65 billion for Energy. *State and Local Fiscal Relief – Prevents state and local cuts to health and education programs and state and local tax increases.]
For those families with children, the $1,000 child tax credit would apply to more low-income families that don’t earn enough to pay income taxes, and low-income families with three or more children will be eligible for an expanded Earned Income Tax Credit.
My personal feeling on this is that the stimulus package will benefit private enterprise more than private citizen, and if you’re lucky enough to replace your current or lost job with one working for the infrastructure projects, then it may benefit you. I certainly don’t think that building more roads is going to help (unless you’re a contractor), and as far as the new car tax credit goes? You gotta be kidding me.
As for me? I can benefit more by parking my car and not driving it, by making food instead of eating out, and in general, just saving my money instead of spending it.
So what I really want to know from you is:
Where are you going to spend your extra $65 a month?