Lisa Simpson
Nov 20,2009
In: Finance

Congress Allows for Expansion of Tax Credit and Extension of Unemployment Benefits

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Congress has come forward to try and put back the economy on its rails by allowing for expansion of the popular tax credit facility. It will be available not only for those buying houses for the first time but for others also at a reduced rate. Unemployment benefits would also be extended beyond the usual stipulated period.

The bill was passed recently (403/12). Each day about 7,000 persons cross the deadline of unemployment benefits. $8,000 tax credit for first time house buyers is also set to expire on 30th November. President Obama is expected to ink it into law.

The package amounting to $24 billion is also inclusive of allowing tax credits for struggling entrepreneurs.
According to IRS nearly 1.4 million made applications for the house buyer’s credit till August and this has helped to infuse activity into the apathetic housing market. The law will permit the extension of the plan till the following June as long as the buyer signs the contract before 30th April. A tax benefit of $6,500 would be extended to those buyers who have lived in their present houses for at least five years. The income eligibility has also been expanded to $125,000. To qualify the value of the house has to be below $800,000.

About 2 million who are no longer entitled to their jobless benefits that calculates to $300 per week, would get an extra 14 weeks of grace by the new bill. Unemployed persons in the states where the rate of joblessness is 8.5% and above would get an additional 6 weeks more than the extra 10 weeks.

Steny Hoyer the House Majority Leader commented that the bill would give a boost to the economy as the beneficiaries would start spending the dollars to meet their requirements. He said, “We help people in very bad straits and we help our economy and help us all.”Except for a dozen Republicans all voted for the bill. Many however took this chance to criticize the Obama government’s measures to create more jobs. Kevin Brady (Republican/Texas) said, “Make no mistake, the unemployment benefits are no substitute for a good job.”

Since June 2008 this would be the fourth extension. Once the bill became law, the unemployed in the worst hit states would received benefits for a maximum period of 99 weeks – breaking the previous record of 65 weeks of the 70’s.

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