With just a week on the job, President Obama is dealing with an economic crisis unlike any other since perhaps President Franklin D. Roosevelt took office in 1933. To tackle this dilemma, Obama is seeking to get an $825 billion economic recovery plan through Congress by mid-February. Americans have heard the speeches about tax reform, job creation and investing in our infrastructure, but what will this all mean to you?
The stimulus bill is unprecedented in its scope and breadth, and its cost is structured by two-thirds spending and one-third tax cuts ratio. The biggest relief is aimed to target the poor and unemployed coupled with money to assist state government and local schools. Obama has stated the proposal will ”save or create over three million jobs, provide tax relief to struggling families and businesses that create jobs, and invest in priorities like health care, education, and energy that will make America strong and competitive in the 21st century.”
Americans should not expect to see any immediate relief as many of the projects and investments have long-term goals. However, come tax time, 95% of the workforce could benefit from a $500 tax cut while working couples can expect to receive a $1000 tax benefit.
With a little spare cash in your wallet, how do you think you will spend it? Are you leaning towards building an emergency savings fund or working towards paying off outstanding credit card debt? Perhaps you want to take advantage of all the amazing car deals out there, locate an auto loan and use the money as a down payment on a new vehicle.
The economy would certainly benefit if a large portion of the tax cuts are used to finance shopping sprees across the nation, but the choice is ultimately yours. What will you do with the money saved on taxes?
I heard Suze Orman say once that you should always pay as little as possible in taxes, so that you weren’t giving the government free loans (without interest). I think this stimulus is like interest payment for previous years’ tax loans. Personally, it will reduce the amount I owe, so it will have a less direct effect on my personal choices to spend/save, etc.
most likely it will pay off my credit card bills. or maybe i’ll donate it to a non-profit. luckily for me i’m not in such a bad situation as many other americans. but my prayers go out to all those who are still losing their jobs.
I don’t see how a tax refund or tax cut can really stimulate the economy. Most of the people here seem like they’re going to pay down their own debt, which does nothing to raise consumer spending, which is what really drives our economy. This reflects a new trend towards saving versus consumption. The difference between the US and Japan (during the lost decade) is that their citizens had substantial savings to see them through.