Obama Said to Push for Tax Cuts in U.S. Stimulus Plan

President-elect Barack Obama is pushing for tax cuts amounting to hundreds of billions of dollars in a stimulus package he’s asking Congress to pass within the next several weeks, a transition official and a Democratic aide say. Obama is asking that tax cuts make up 40 percent of a stimulus package, the officials say. The measure may be worth as much as $775 billion, meaning tax cuts may constitute more than $300 billion of the legislation.

Making tax cuts such a large part of the stimulus may help win support from congressional Republicans. Senate Minority Leader Mitch McConnell, a Kentucky Republican, said today his party would support an immediate middle-class tax cut as part of any stimulus package.

Obama’s plan would attempt to boost consumer demand by spending $140 billion on tax breaks worth $500 for individuals and $1,000 for couples, according to a House Democratic aide. The change would come by altering tax-withholding rules, rather than though a rebate check as with the previous stimulus plan enacted last year, so that workers would see an immediate increase in their take-home pay.

The plan also includes business tax breaks, including ones allowing companies to write off more of their losses against previous years’ tax bills. Other provisions would allow companies to write off more of the cost of their equipment, the aide said. The plan also attempts to combat joblessness by offering companies tax breaks for hiring more workers, the aide said.

Many of the business tax incentives would be accelerated from future years so that any dollar written off now would not be able to be claimed in future years, the aide said. That would reduce the long-term impact of the tax cuts on the federal budget deficit.

The tax cuts would be part of stimulus Obama is seeking which will also boost spending for roads, bridges, power grids and other public works projects.