The size and scope of new tax breaks for working families implemented as part of President Obama's economic stimulus package are historic. According to data released by the White House today, 95 percent of working families will see a reduction in their tax by $400 for individuals and $800 for households beginning this year.
Many millions more Americans will see additional credits and breaks for everything from purchasing new cars and homes, to child care and college tuition expenses, and for losses and depreciation for small businesses hurting during this recession.
For 2009, a typical family with three children and an annual income of $30,000 would keep as much as $2,172 as part of the president's tax cut plan. In addition to keeping the $800 for the working families tax cut, known as the Making Work Pay Credit, this family could benefit from new credits for child care expense and a rise in the Earned Income Tax Credit.
A married couple earning a combined $90,000 with one child in college, would save about $1,500 in 2009 through the Making Work Pay Credit and new credits for college tuition expense, according to White House budget office estimates.
Another family of four preparing to purchase their first home would earn the new $8,000 homebuyer's credit that was included in the president's economic stimulus package. Along with the Making Work Pay Credit, this family could save $8,800 in 2009. So far, the White House says, $3 billion have been returned to first-time homebuyers through this tax credit.
An estimated 70 percent of these new tax credits and cuts will go to 60 percent of middle-income Americans like the typical families cited here. The Obama administration's tax policies sharply contrast with the Bush administration's, which primarily benefited the very richest Americans.
In addition to direct benefits for middle-class families, the president's tax cutting policy will help lift as many as 2 million families out of poverty and is expected to create or save 1 million jobs. Over 64 million retirees, disabled veterans and other Social Security beneficiaries, who do not pay federal income taxes, will also benefit from a one-time stimulus payment of $250 in 2009.
