He has been in office only a few days and has already made some great moves. Most noticeably around the famous torture prison and the salary freeze for those cabinet members making over$100,000.

At Secret Consulting, we believe in financial education which we know you cannot obtain from TV, the news is pretty much paid for and so it doesn’t always show you the reality behind every segment it shoots. The hottest topic on TV now of course is President Obama. The people have spoken and our wonderful new president has been elected. He made many promises during his campaign, as in every campaign, some he will keep, some he wont.

Now lets look at his latest proposal, The famous Stimulus Package nearing a Trillion Dollars.

Phase one would be tax cuts. Here is his plan or what we know of it so far:

A Middle Class Tax Cut:

While he was running for President, Barack Obama pledged to introduce a fairer tax system that would lower income taxes for the vast majority of American families. The incoming President is now set to make good on his campaign promise by asking Congress to approve a raft of middle-class tax cuts that form part of his proposed economic stimulus package.

Rather than reining in his planned tax cuts for America’s middle class in the face of the snowballing economic crisis, Obama has almost doubled the value of the various tax breaks for individuals to around $150 billion over 2009 and 2010. This is intended to put more cash in the pockets of ordinary working people and help them cope with the current financial turmoil. Once approved, the tax reductions will be felt almost immediately since part of the package takes the form of a payroll tax cut. This will give each worker an extra $10 a week in their take-home pay.

The centerpiece of Obama’s new tax plan is the “Making Work Pay” program, which lowers the amount of federal income tax paid by 95% of the country’s workers. Individuals who earn less than $200,000 will save $500 a year, and couples with an income of less than $250,000 will take home an extra $1,000. A change in the tax code means that less money will be withheld from people’s paychecks.

This tax cut is fully refundable, so people who don’t pay income tax will receive a payment instead. The new administration is hoping to encourage people to start spending again – which will aid the economic recovery – by giving them a modest “pay rise” rather than a lump sum. The lump sum payments distributed in 2008 were mostly used to pay down debt.

Other ways in which Obama intends to ease the tax burden on low- and middle-income earners include:

• Removing income tax for seniors who make under $50,000 a year. Seven million senior citizens will no longer pay any income tax.

• A refundable 10% mortgage interest tax credit. 10 million low- to middle-income homeowners who don’t currently itemize will save an average of $500 on their taxes.

• A refundable $4,000 college tuition tax credit. This is meant to cover the whole cost of community college and around 2/3 of the tuition for 4-year public college.

• Expanded tax credits for child care. Low-income working parents can get back up to 50% of the first $6,000 they spend on child care. The tax credit is fully refundable as well.

• Health care tax credits. As part of his health care plan, Obama will offer tax credits to make health insurance more affordable.

Another welcome reform that will save millions of taxpayers time as well as money is a simplified tax system. 40 million Americans will now be able to fill in their own tax returns in just a few minutes without having to engage a tax preparation service.

The proposed tax plan is now being submitted to Congress for approval as part of the overall stimulus package. Although there are several areas of contention in the stimulus package as a whole, the middle-class tax cuts are popular across party lines and are expected to pass without major changes. The new administration is urging Congress to work on passing the overall package “with all deliberate speed”, and has expressed the hope that it be approved by mid-February.

So now you know phase one or what was proposed so far we should say. My belief still remains that force feeding an economy is not the solution to fixing it but Obama has made some great moves in selecting his cabinet and therefore we will give him the benefit of the doubt so far…

Related posts:

1. Obama and The Middle East
2. Stimulus Plan Incentives to Increase Consumer Confidence
3. Obama’s Tax Credit Check Plan
4. Knowledge is Recession Proof
5. Obama’s Stimulus Package and Its Impact On The Economy