Tax Brackets

Economic growth plan requires reading between the lines

moneygreen34President Bush and U.S. House leaders agreed last week to a tentative economic stimulus package that will inject $150 billion into the country’s struggling economy. The proposal is scheduled for a vote in Congress this week. A lot of media attention has been placed on the plan’s objective to disperse rebate checks ranging from $300 for individuals who did not pay federal income tax but who earned more than $3000 last year, $600 per couple; $600 to individuals who paid income tax, $12,000 to couples filing jointly, (including an additional $300 for each child). However, it is the benefits left off of the package that economist Algernon Austin believes might actually hurt most low- and average-income blacks.

Austin, the director of the race, ethnicity and economy program at the Economic Policy Institute, notes that the plan excludes aid to state governments, funding for infrastructure projects, extending unemployment insurance, and increasing food stamp benefits and Medicaid payments to states. “These types of policies will disproportionately benefit black Americans because blacks are disproportionately poor and low-income,” Austin says.

“This is a very weak stimulus package” Austin says. “The plan does not do enough in terms of meeting the needs of average Americans. The benefits are skewed toward higher-income individuals.”

According to Austin, roughly 20 million households, mainly low-income seniors, will not receive any rebates because they do not earn enough money and are not required to file tax returns.

He says that without aid from the federal government, state economies, some which are already faltering, will begin to cut back social service programs such as Medicare and SCHIP (State Children’s Health Insurance Program) at a time when a recession is going to increase the demand for these particular programs. On the other hand, repairing bridges and schools and various other infrastructure projects would directly produce jobs.

R. Donahue Peebles, chairman and CEO of the Peebles Corp. (No. 13 on the BE INDUSTRIAL/SERVICE 100 list with $403 million in sales), a real estate and hotel conglomerate, agrees that economic growth depends on customer spending, but he suggests that we need people in the middle to higher tiered income-earnings brackets to come back into the marketplace since they do the most spending.

“It is important that people who have jobs start spending, by traveling, staying at hotels, and consuming products so that people in the service industry can have work,” he advises. Peebles also believes that accelerated depreciation, one of the bonuses the plan extends to business owners, will encourage businesses to invest in new equipment.

Some argue that corporate tax breaks have a limited effect. “A growing economy is better for businesses than additional write-offs, which won’t mean much if the economy continues to decline,” Austin says.

Peebles insists that the housing rescue arm of the stimulus package will drive economic momentum. “It is important that we have a vibrant real estate industry because [housing] is the one last major product that we manufacture here,” says Peebles.

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  • Elaine Jackson

    looking forward to this session this week

    Elaine Jackson, PMP
    Holistic Project Management Consulting

  • Jacardo01

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  • Jacardo01

    when you finish the 3 videos from each week, you will get the badge

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    • Love

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    I can only dream about reading one of the magazines hoping they contain as much if not more information to grow, build and operate your business no matter what form.  Thanks Small Business University keep em comin…

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  • AllisonSmiles

    When to say when! I have had a pressing question for quite some time, thank you for providing this opportunity!

    Question: I often see the potential in my client before they see/believe in themselves. This often cost me more time in convincing & explaining than producing. While I meet/exceed my goals, I often feel there is much more that could be accomplished with more trust in me, IF NOT, more trust in themselves/vision. Is this the moment when I should assert my right of choice and move to the next client OR is it reasonable to be patient for a certain period of time? If so, what is the suggested length of time.

    Please note: This situation also effects the value of my time, thus affecting my income. Many thanks.

    • Donna Maria Coles Johnson

      Allison: That’s a good question. When working with clients, especially one-on-one, we have to be patient because we frequently see their potential before they do. The trick here is to be discerning, and to know the difference between a client who is working hard, upleveling, and being accountable, but just is not quite confident yet, and a client who is not giving their all. In the latter situation, sometimes, you have to let them go. I have done this many times. When I am working harder than a client is to achieve his or her goals, it’s definitely time to move on. Free the client up to work at a level she is more comfortable with and free yourself up to work with a client who is really stepping up her game. Hope this helps!

  • Kathy Scarbrough


    • Donna Maria Coles Johnson

      Kathy: I think so, generally speaking. If you can get paid in advance, you cut your costs by not having to bill after a service is rendered. You also cut down on your costs because you don’t have to chase a client down for a check, or update their credit card information if a card is expired or whatever. Now, if you are taking pre-orders for a product you have not yet created, you have to be very careful. That is not always legal with credit card companies, plus it means you have to make sure that you deliver whatever the customer pre-ordered ON TIME. Use caution when you do this. Hope this helps.

      • Kathy Scarbrough

        Thanks Donna, I have been exploring this as a means of a stable cash flow option, you are the first to mention that credit card companies might have a problem with pre-orders for a product that has not been created.. I appriciate the info. That is really important to know.

        • Jackie Boards

          BTW: You may want to look at crowdfunding resources if you need funding for product development.

  • Kenya Cameron

    I am trying to start a catering home business. How do I go about that? and do I have to go to culinary art school to start my business?