Posted in: Special report, Tax compliance
Our next president will have to deal with the economic crisis immediately. Here’s what his proposed stimulus plan would mean for your company — if it gets approved by Congress. President-elect Obama’s proposed stimulus package has several benefits in store for companies of all sizes. But each one will likely require a little more effort on Accounting’s part to take advantage of.
Here are the business-related aspects of the proposal as it currently stands:
- More than $100 billion (yes, with a b) in tax cuts for businesses — on top of another $200 billion or so for individual taxpayers.
- A refund provision that would allow companies with recent losses to claim refunds for taxes paid as long as five years ago. (To get the refund, you’d have to refile the old returns and use the past year’s losses to offset prior gains.) Currently, you can only go back two years to claim those refunds.
- New incentives (credits, bonus depreciation, etc.) for qualifying purchases of new equipment.
- Companies that hire new workers could be eligible for a new one-year tax credit.
Most of the proposals are clearly aimed at stimulating spending — and giving companies a quick infusion of cash so they actually can do more spending.
But some of the proposals aimed at individuals could impact your procedures as well. Most notably, the stimulus package would provide a tax cut for workers (estimated to be $500 for individuals and $1,000 for couples).
The most likely way this would be implemented is by adjusting federal income tax rates. So Payroll needs to be prepared to not only make the switch — but to field a lot of questions from concerned and/or confused employees.
When’s it going to happen — if it happens?
Some Congressional Republicans are already raising concerns that the package has too much spending, not enough tax cuts. But the proposals aimed at businesses have been supported by a broad range of business and political interests.
With everyone nervous about where the U.S. economy stands, as well as their place in it, the passage of some stimulus shortly after Obama takes office seems likely.
The only real question is how close it will be to the one he’s outlined. We’ll keep you posted as the story develops.
Do you think the proposed stimulus package will work? What do you think needs to be done to right the economy? Share your two cents in the comments.
Update: You can see a fuller version of the President-elect’s stimulus plan here.