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Economic Stimulus: How does the American Recovery and Reinvestment Act of 2009 change the tax code?

The American Recovery and Reinvestment Act of 2009 (ARRA) provides temporary reductions in both individual and corporate income taxes with the multiple goals of giving households more after-tax income to spend, encouraging consumers to purchase homes and new cars, cutting taxes for struggling businesses, and promoting investment.  For individuals, the act expands existing tax credits, creates new credits and a deduction for sales tax paid on new automobiles, provides alternative minimum tax (AMT) relief for 2009, and exempts some unemployment benefits from tax .  For businesses, the act reduces taxable income—and hence taxes—for the 2009 and 2010 tax years and provides credits that promote certain activities.  The Joint Committee on Taxation estimates that ARRA’s tax provisions will decrease revenue by $287 billion over the next ten years. 

See also
Economic Stimulus:  What does the American Recovery and Reinvestment Act do for individuals?
Economic Stimulus:  What does the American Recovery and Reinvestment Act do for businesses?
Economic Stimulus: When is fiscal stimulus appropriate?
Economic Stimulus: What characteristics make fiscal stimulus most effective?
Economic Stimulus: What fiscal stimulus options would be most effective?

Further Reading
Urban-Brookings Tax Policy Center, “Tax Stimulus Report Card: Conference Bill” (Washington, February 13, 2009). http://www.taxpolicycenter.org/UploadedPDF/411839_conference_reportcard.pdf

U.S. Congress, Joint Committee on Taxation, “Description of the American Recovery and Reinvestment Tax Act of 2009” (Washington, January 27, 2009). http://jct.gov/publications.html?func=startdown&id=1239

Congressional Budget Office, “Estimated Macroeconomic Impacts of the American Recovery and Reinvestment Act of 2009,” (Washington, March 2, 2009).
http://cbo.gov/ftpdocs/100xx/doc10008/03-02-Macro_Effects_of_ARRA.pdf

Data Sources
U.S. Congress, Joint Committee on Taxation, “Estimated Budget Effects Of The Revenue Provisions Contained In The Conference Agreement For H.R. 1, The “American Recovery And Reinvestment Tax Act Of 2009” (Washington,  February 12, 2009). http://jct.gov/publications.html?func=startdown&id=1172

 

Katherine Lim                  
Last Updated April 27, 2009

 
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