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Economic Stimulus

Update: February 13, 2008 - The President formally signed the economic stimulus package described below into law. 

 

Update:  February 7, 2008 - Today the Senate agreed to keep the House package, as described below, intact. Adding only some clarifying provisions ensuring that seniors and veterans would not have problems receiving their rebates.  The House quickly added its consent and the measure was sent to President Bush for signature. 

 

 

January 29, 2008 - The House today passed an economic stimulus package that was the product of bipartisan negotiations between House leadership and the White House.  The package is designed to give our slowing economy the boost it needs to once again pick up the pace of growth.  The Package is centered around providing tax rebates for most taxpayers, providing tax incentives to help businesses grow, and making it easier for Americans to purchase a home.   

 

Tax Rebates for Most Tax Payers - 

 

Most tax payers can expect to receive a tax rebate in the mail in the coming months. The economic stimulus plan passed by the House includes tax rebates ranging from $600 for individuals who earn less than $75,000 to $1200 for couples who earn up to $150,000. On top of that base rebate, families with children will receive an additional $300 for each child in the family. 

 

For example an average Staten Island or Brooklyn family of four -- like a police officer and a teacher -- who makes less than $150,000 a year will likely be receiving a rebate payment of $1800 if this plan is signed into law.  They would receive the maximum base rebate of $1200 plus $300 for each child.  An individual making just under $75,000 a year is likely to receive a $600 rebate check.

 

 

Business Tax Incentives - 

 

The stimulus package includes two major tax incentives for businesses, particularly the small businesses which serve as the engine of our economy.  Bonus Depreciation: small businesses will be given a 50% tax deduction on new equipment they purchase in the year it is put into service.  This will create incentives for businesses to invest and create more jobs for American workers.  Section 179 Expensing: This will allow businesses to fully expense $250,000 in tangible property in the year it was purchased up to an overall investment limit of $800,000.  This provision will provide businesses even greater incentive to invest and help create jobs for Americans.

 

Mortgage Relief - 

 

The package includes a provision to increase the loan limits for Fannie Mae- and Freddie Mac-backed mortgages for high-cost areas like Staten Island, Brooklyn and New York City. This proposal would potentially allow qualified Americans to obtain an interest rate around one point lower on jumbo loans (loans in excess of $417,000). 

The proposal calls for raising the limits on Fannie- and Freddie-backed loans from $417,000 to 125% of an area’s median cost, up to $729,500.  In the 13th Congressional District (Staten Island and Brooklyn), where the median home price is roughly $550,000, the new loan limits for Fannie- or Freddie-backed mortgages would jump from $417,000 to approximately $687,000. In other words, all loans between $417,000 and $687,000 would be viewed as conforming under the House plan, and therefore, potentially eligible for lower interest rates.

 

The current national average for a 30-year fixed jumbo loan is 6.56% while the interest rate for a 30-year fixed conforming loan is only 5.45% for qualified buyers. For example, on a $550,000 mortgage, the savings is about $390 per month, or more than $4,600 a year – or $138,000 over the life of the mortgage. The savings on a $650,000 mortgage would be about $460 a month, more than $5,500 a year and more than $165,000 over 30 years.