3 of 7
Taxes: Stimulus plans ahoy
Last year: Thanks to Joe the Plumber, Barack Obama's campaign pledge to restore the top income tax rates to pre-Bush levels got national attention. Yet despite John McCain's warnings that repealing Bush's tax cuts for those earning more than $250,000 a year would "tax half of the income of small businesses in America," it turned out that more than 97% of small business owners - including Joe himself - would see no change in their income taxes as a result. Meanwhile, many Americans took home a one-time tax "give back" though the $600 stimulus checks mailed out by the IRS last spring.

This year: With the economy now officially mired in recession, Obama is likely to hold off on raising the top tax rates until 2010, when the Bush tax cuts are set to expire on their own. Instead, Obama is working on his own stimulus plan, one top adviser David Axelrod has will include "a portion" of the "Making Work Pay" tax credits Obama proposed during his campaign. These credits would provide a rebate of up to $500 per person for employed individuals earning less than $85,000 a year. These would most likely come in the form of a reduction in payroll taxes - to get money into workers' hands as fast as possible - but would only cut employees' contributions, not employers'.

Calls for a broader "payroll tax holiday", as the NFIB has lobbied for, are less likely to find a place in any recovery plan. The problem with a payroll tax break, says Urban Institute economist Bob Williams, is that "you're putting money in the hands of people who are more likely to hang onto it" - a point Obama's new budget chief, Peter Orszag, himself made in arguing against a payroll tax holiday in 2001. -Neil deMause

NEXT: Layoffs and long hours ahead

LAST UPDATE: Jan 06 2009 | 6:06 PM ET
Sponsored by
More Galleries
7 hot businesses to start now It's hard to predict what businesses will take off, but these startup ideas have been drawing tons of interest from entrepreneurs and their customers on Thumbtack.com. More
How will a minimum wage hike hit businesses? Thirteen states increased the minimum wage on Jan. 1, and President Obama supports raising the federal rate to $10.10. 4 small business owners weigh in on how an increase would affect them. More
America's favorite businesses From a science camp for girls to a kombucha brewer, communities around the country voted on their favorite small businesses. These 12 came out on top, each scoring a $250,000 grant from Chase and a trip to Google's headquarters. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.