Tax News

CCH (cch.taxgroup.com) reports:

  The Middle-Class Task Force, chaired by Vice President Biden, released a staff report on March 19 examining the impact of the recently enacted American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) (P.L. 111-5) on middle-class families. According to the report, tax benefits from the 2009 Recovery Act provisions could add $2,000 or more to after-tax family income, depending on family type and circumstances.

  President Obama maintains that the new law will create or save 3.5 million jobs over two years. Jared Bernstein, executive director of the task force, said that the average income of middle-class families could rise by an estimated $3,000 as a result of the "better jobs outlook, along with some of the tax benefits that are in the package."

  The staff report highlighted several 2009 Recovery Act provisions beneficial to middle-income families. At the top of the list is the Making Work Pay tax credit, which is expected to lower taxes for 129 million working families. Individuals earning up to $75,000 are eligible for a $400 tax credit and married couples, filing jointly, are eligible for an $800 tax credit. Because employers are adjusting withholding tables in March, most workers are expected to receive the tax credit directly in take-home pay beginning on April 1.

  Other 2009 Recovery Act provisions cited in the report are: expansion of the earned income tax credit for low-income families; the child tax credit; and the American Opportunity Tax Credit for higher education; the first-time homebuyer tax credit; and a new car deduction. The staff report was released in conjunction with the second in a series of town hall meetings focusing on issues affecting middle-income workers. The meeting in St. Cloud, Minn., addressed transportation issues. The first session in Philadelphia, Pa., focused on green jobs.

  By Paula Cruickshank, CCH News Staff

Middle Class Task Force Staff Report on the American Recovery and Reinvestment Act: Helping Middle-Class Families