Everyone knows our economy needs spending to get things rolling again. Everyone also knows that cutting taxes and providing tax relief can stimulate that spending.
This week, thanks to tax cuts passed a year ago, more than 680,000 Nebraskans will keep about $6.7 million their hard-earned money. People will spend it how they like and not have to send it off to Washington. They kept another $6.7 million last week. They'll keep another $6.7 million next week.
Stimulus Tax Relief Keeps Money in Nebraskans' Pockets
That is happening because of something that doesn't get a lot of attention: The stimulus package Congress passed a year ago this month had major tax relief for thousands of Nebraskans and Nebraska businesses.
In fact, one-third of the bipartisan bill I helped negotiate went for tax relief. It provides $337 billion in tax relief encouraging spending in our national economy for job creation and growth. That's one of the biggest tax cuts ever.
That tax-related help, along with stimulus spending, and Nebraska's tradition of common sense spending, is probably one reason we're not feeling as much economic pain as people in some other states. Our unemployment is about half the national average. Many of our businesses are holding their own, though some are clearly struggling. People are finding new jobs, hanging onto the ones they've got, and Nebraska's economy is moving ahead and not stagnating.
The centerpiece of the bill is a cut in personal income taxes through a "Making Work Pay" tax credit. It totals up to $400 per year for an individual and $800 for working families in 2009 and 2010.
By delivering millions weekly in tax relief, Nebraskans kept as much as $340 million last year, according to the non-partisan Congressional Research Service. They'll keep that much again this year.
That helped people buy food, clothing or goods, pay bills, or spend on other routine needs. It has been a regular primer for our economy.
In addition, families with children are seeing an increase in the eligibility for the refundable tax credit up to $2,500 through this year. The earned income tax credit also has been increased for working families with up to three children.
There's other tax relief from the stimulus bill that has helped first-time homebuyers move into a home, increased the federal income tax credit to grow our alternative fuel infrastructure--helping our ethanol industry--and easing the Alternative Minimum Tax.
In Nebraska and across the country people have debated how many jobs the stimulus bill--both its tax relief and targeted spending--created. This week, the nonpartisan Congressional Budget Office weighed in and caught my attention. The CBO estimates that the stimulus created or saved 1 million to 2.1 million jobs by the end of last year. That's good news.
A year ago, when our economy was really in trouble, most economists we were using the "D" word amid fears of a major depression. Now nearly everyone uses instead the "R" word as we continue to hope our economy is emerging from a tough recession. The tax relief in the stimulus bill is playing a part and we all know things could have been a lot worse.