Obama To The Rescue With Economy-Boosting Tax Cuts

by Leroy Baker, Tax-News.com, New York

15 October 2008

Barack Obama addressed the American nation in Toledo, Ohio this Monday, outlining how he plans to revive the US economy through tax cuts for the middle class and job creators.

Presidential Candidate Barack Obama spoke to 3,000 people at the SeaGate Convention Centre about the trials that America faces. “This country and the dream it represents are being tested in a way that we haven’t seen in nearly a century,” he said.

He then went on to reveal his policies, focused on job creation, lowering taxes for the middle classes and targeting the government budget towards aiding small businesses and communities.

He proposes to tackle the US unemployment rate, which is projected to rise to 8% next year, by offering tax credits of USD3,000 to employers for each new employee hired for two years. Small businesses and corporations investing in job creation or innovation would also receive a reduction in capital gains tax and corporate tax.

Individuals struggling with mortgages and the rising cost of living would be given access to 15% of their Individual Retirement Account or 401(k) without tax penalties up to a maximum of USD10,000. He has also vowed to enforce a 90-day moratorium on mortgage foreclosures for homeowners that are acting in good faith.

Obama pledged to reduce taxes across the board for families who are earning less than USD250,000, with 95% of workers to receive tax cuts of up to USD3,700. This part of Obama’s plan is targeted towards low- and middle-income seniors, homeowners, the uninsured, and families sending a child to college. Tax credits will also be provided in order to subsidize the cost of healthcare.

Obama spoke of plans to “extend and expand unemployment benefits to those Americans who have lost their jobs and are having a harder time finding new ones in this weak economy.”

The Senator plans to achieve this by increasing the level of tax for those earning above USD250,000, restricting remuneration packages for CEOs and revising and tightening the government’s budget. He said: “I won’t pretend this will be easy or come without cost. We’ll have to set priorities as never before, and stick to them; It means scouring the federal budget, line-by-line, ending programs that we don’t need and making the ones we do work more efficiently and cost less. George Bush has dug a deep hole for us. It’s going to take a while for us to dig our way out.”

Obama’s advisers have put the cost of the full economic stimulus plan at USD175 billion, including USD60 billion for the steps announced Monday.

Of the earlier USD115 billion, USD50 billion would be used to help states and to speed construction of roads and other infrastructure projects that create jobs. About USD65 billion of it would be the cost of a second round of rebates to taxpayers in this fiscal year.

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