tax payer rebate

WASHINGTON — Congressional leaders completed a deal today with the White House on an economic stimulus package that would give most tax filers refunds of $600 to $1,200, and more if they have children.

House Speaker Nancy Pelosi and Republican Leader John Boehner scheduled a news conference for this afternoon to announce the $150 billion package, hammered out in a week of intense negotiations with Treasury Secretary Henry Paulson.

``We are pleased that the negotiators have been able to reach an agreement on an economic growth package,'' White House press secretary Dana Perino said today. She said Bush would make a statement about the deal later in the day.

Congressional aides announced, said they hope the checks could go out as early as June.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those couples with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don't pay taxes would get $300 rebates.

The rebate part of the plan would cost about $100 billion, aides said. The package also includes close to $50 billion in business tax cuts.

The package would allow businesses to immediately write off 50 percent of purchases of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A Republican-written provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining rebates of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes.

The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps rise higher for individuals and couples with children.

U.S. Sen. Max Baucus, D-Mont., scheduled a meeting of the Senate Finance Committee for next week to consider the stimulus package.

``The Senate will want to speak, as well,'' Baucus said, adding that he and Sen. Charles Grassley of Iowa, the panel's senior Republican, had ``agreed to work together, move quickly, and mark up economic stimulus legislation next week.''

Senate Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for President Bush's signature

Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush's initial proposal.

To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac's loan purchases.

After a key Wednesday night meeting in which the parameters of an agreement were reached, Pelosi and Boehner spoke again Thursday to cement the accord.

In the talks, Pelosi pressed to make sure tax relief would find its way into the hands of lower-income earners while Boehner pushed to include upper middle-class couples, according to congressional aides.

The emerging package was already drawing fire from liberal activists and labor unions upset that proposals to extend unemployment insurance and boost food stamps had been dropped. Many Democratic lawmakers had assumed those proposals would make it into the package, and critics of the deal said those ideas could pump money into the economy more quickly than tax rebate checks that won't be delivered until June.

Democrats wanted to extend unemployment benefits for people whose 26 weeks of benefits have run out, but Republicans resisted.

Conservative Republicans, meanwhile, were likely to be restless over tax rebates going to those without income tax liability.

Democratic aides said greater GOP flexibility over giving relief to poor families with children — who would not have been eligible under Bush's original tax rebate proposal — was the catalyst that moved the talks forward.

THE DEAL

Congressional leaders have reached a deal with the White house on a bipartisan economic stimulus package that is expected to move swiftly through Congress and give most tax filers rebates of $600 to $1,200.

WHAT'S IN

Tax rebates: Checks of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes, so long as they earned at least $3,000 in 2007. Families with children would receive an additional $300 per child, while those paying income taxes could receive higher rebates. The full rebate would be limited to individuals earning $75,000 or less and couples with incomes of $150,000 or less, but a partial rebate would go to individuals earning up to $87,000 and couples earning up to $174,000. The caps are higher for people with children.

Business tax write-offs: Spurring business investments with so-called bonus depreciation and more generous expensing rules.

Housing rescue: Raising the limit on Federal Housing Administration loans from $362,000 to $725,000. Boosting the cap on loans that Fannie Mae and Freddie Mac can buy from $417,000 to $725,000.

WHAT'S OUT

Permanent tax cuts: Republicans conceded that their top priority would have to be left out.

Unemployment insurance: Democrats wanted to extend benefits past 26 weeks.

Food stamps: A boost for benefits.

Medicaid: Democrats gave up on including Medicaid payments to states.

Low-income heating subsidies: Democrats are surrendering the fight to include them.

Infrastructure spending: Spending on transportation or repair projects already under way is off the table.

Republicans' proposal to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

 

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