Tax News

CCH (cch.taxgroup.com) reports:

  President Obama will meet with House and Senate Republicans on their turf on January 27, hearing their recommendations on what should be in a final economic recovery package. Obama has scheduled separate meetings on Capitol Hill with the House and Senate GOP caucuses hoping to garner support for legislation that has drawn criticism from Republican lawmakers for containing too much spending and not enough tax cuts.

  If House and Senate Republicans come forward with tax cuts that would improve the existing plan, the White House is willing to consider them, according to White House Press Secretary Robert Gibbs on January 26. However, he maintained that the $825 billion House package containing $275 billion in tax cuts is a "pretty good balance" of tax and spending provisions.

  The House Ways and Means Committee approved the tax title to the American Recovery and Reinvestment Bill of 2009 (HR 598) on January 22 (TAXDAY, 2009/01/23, C.1). Gibbs noted that the House measure already includes several tax cuts supported by GOP lawmakers, such as the five-year carryback of net operating losses. Some House Republicans are pressing for a 5-percent income tax rate cut for taxpayers in the 10-percent and 15-percent tax bracket. They argue that lower tax rates would bolster the economy and reach more taxpayers than the $145.3 billion Making Work Pay tax credit of $500 to individuals and $1,000 to couples.

COBRA Tax Credit Heading

  The White House released further details about the Obama economic plan in a report released on January 24. The report includes a new tax credit proposal to help newly unemployed workers keep their health insurance through COBRA and a new Medicaid option for low-income individuals who lack access to the stopgap insurance. Combined, the proposals could help to provide coverage for almost 8.5 million people, according to the White House report, entitled "Recovery Plan Metrics Report."

  The Obama plan also contains several measures that are in the Ways and Means package. They include a new $2,500 partially refundable higher education tax credit and a $1,000 "Making Work Pay" tax credit. The White House said the Making Work Pay tax cut would benefit 95 percent of workers and their families. Under the proposed higher education tax credit, nearly 20 percent of high school seniors who are not eligible under current law would qualify for at least a portion of the tax cut. Obama also proposes to expand the child tax credit. According to the White House report, the plan would provide a new tax cut to more than 6 million children and increase the existing credit for more than 10 million children.

  By Paula Cruickshank, CCH News Staff

American Recovery and Reinvestment Act of 2009, HR 1

White House Release: Recovery Plan Metrics Report

Code Finding List for HR 598, American Recovery and Reinvestment Tax Act of 2009, as of January 25, 2009