January 28, 2009 12:04 PM | Permalink |
National and State-by-State Fact Sheets in Appendix
On Friday, January 23, House Republican Leader John Boehner (OH) and Republican Whip Eric Cantor (VA) presented their “Economic Recovery Plan” to President Obama. The Republican plan is based on income tax cuts for relatively well-off families, and business tax cuts. As a result, it is unlikely to provide the needed boost to consumption that economists believe can come from either direct government spending or putting money in the hands of working class people who are likely to spend it quickly.
The House GOP plan proposes to reduce the two lowest individual income tax rates from 15% to 10% and from 10% to 5%. To get the maximum tax cut of about $3,400 from this rate reduction, taxpayers would have to have enough taxable income to reach the start of the third income tax bracket. For example, a married couple with two children would typically need to earn more than $100,000. 1 That’s considerably more than most people earn. In fact, only one in five of all taxpayers hasenough income to reach the third income tax bracket and receive the full benefit of the proposed tax rate reduction