Stimulus package targets consumers

Washington: First-time home-buyers would get a larger tax break. Laid-off workers would receive higher unemployment benefits and new subsidies for heath insurance.

And all but the wealthiest workers would soon get a tax credit worth as much as $800 (Dh2,936) per couple.

Bigger government checks - long favoured by lawmakers in an ailing economy - could soon begin landing in mailboxes across the country, and new tax breaks would be available to many families, if the economic stimulus package clears Congress this week.

The $789 billion compromise worked out by House and Senate negotiators on Wednesday contains a long list of new ways that Americans can get money from Washington as they struggle through the worsening recession.

Below are some provisions of the compromise bill, which must still be approved by the House and Senate before being sent to President Barack Obama for his signature.

For most Americans, aid would show up most directly in a simple tax credit. Workers making less than $75,000 a year would get a $400 credit for 2009 and 2010. Couples making up to $150,000 would get $800.

Higher income taxpayers would see smaller credits as the benefit is phased out. Individuals making more than $100,000 a year and couples making more than $200,000 would not get the credit.

In addition, 24 million middle-income Americans would be spared from paying higher income taxes under the alternative minimum tax. The tax was originally designed to apply only to the wealthiest Americans, but it was never indexed for inflation, so larger numbers of taxpayers have been required to pay it.

First-time home buyers could qualify for an $8,000 tax credit. The credit is slightly larger than the $7,500 credit in existing law, but it is substantially less than a proposal in the Senate bill that would have boosted the credit to $15,000 and broadened the eligibility. In addition, the compromise bill waives a requirement that the tax credit be repaid.

Homeowners who install new doors, windows or furnaces to make their home more energy efficient would be able to get as much as $1,500 back through new tax breaks.

Many people paying for college would get a $2,500 tax credit for tuition and other education-related expenses, such as books and computers.

Eligible college students would also receive higher Pell Grants, thanks to a $400 boost in the maximum grant, to $5,250.

Reflecting the priorities of the Obama administration and the Democratic Congress, the most direct aid in the package would go to low-income people and others struggling in the economic downturn.

Millions of Americans receiving unemployment benefits would see a $25 increase in their weekly cheques, up from the average benefit of $200.

Unemployment benefits would last 46 weeks under the deal, up from 26 weeks now. Some people in high-unemployment states could receive benefits for 59 weeks. People who lose a job would receive help in retaining their employer-sponsored health insurance. Under current COBRA law, jobless workers can keep their insurance if they pay the full cost of the premium, which can exceed $1,000 a month for a family.

Under the stimulus bill, the federal government would pay 60 per cent of that premium for nine months. Individuals with annual incomes above $125,000 and couples with incomes greater than $250,000 would not be eligible. Those who qualify for food stamps would see a 13.6 per cent boost in what they receive.

• $400 credit to workers paid less than $75,000
• $25 increase in weekly cheques of jobless
• $8,000 tax credit to first-time home buyers