Stimulus Bike

The Bicycle and the Economic Stimulus Plan

Written by Lee Norris

The Senate republicans want a tax break for the purchase of new cars in 2009 as part of the economic stimulus package. The amendment would allow individuals buying new cars with financing and write off the interest. This tax break does not include a purchase of used vehicles either. The amendment would also let buyers claim the state excise tax. This is a tax break for the wealthy who can afford to buy a new car each year. For the average consumer, the cost of financing a new car out weights any tax benefits. During recession, financing has traditionally been harder to obtain for lower and medium income people.

Just a few months ago, the agenda in congress was weaning this country off of its dependence to foreign oil. Now that the price of crude is down and economy is crashing, the problem of dependence to foreign oil has slipped onto the back burner. The problems of importing oil and the trade imbalance has been around for the past 50 years. If we do not do something about this problem during this recession, then it will come back again in times of prosperity. These problems will most likely be worse in the future.

Why not give tax credits for purchasing new bicycles or for cycling to and from work as part of the economic stimulus package? In the United States on an average, half the car trips made are under three miles. This country consumes around 22 millions of barrels of oil a day. A large percentage of that oil could be saved each day by using bicycles as transportation on these short trips. if only 25% Americans would cycle on trips 5 miles and under, the social benefits to the country would be enormous. Two of the most expensive problems facing Americans today are rising health care costs and arresting greenhouse gases. Cycling makes people slim and healthy, and there are no greenhouse gas emissions to cycling. Cycling is better than tax credits for the economy. The Money saved at the pumps is more cash for the consumer to spend. With a tax credit, the consumer has to wait until they get their tax return. Cycling saves consumers money all the time there by stimulating the economy faster.

Recessions are times of re-tooling for the next round of prosperity and rethinking the way we do things. If all Americans do is buy new cars to stimulate the economy, we will pay for it later. This is just more of the old squirrel cage economy that got us into this economic mess in in the first place. In effect, what we are asking future generations is to finance our expensive life style today. Is that all there is to the economic stimulus package?

Stimulus Bill Passes with Amendments in the House

The House amended and passed the American Recovery and Reinvestment Plan but still without support from republicans. House democrats drafted the bill, as President Barack Obama urged for a bill that would receive support from both parties, but even with some parts catering more towards republican wants, there were no votes support from the party. The final vote was 244 to 188. Obama is still hoping for a few more changes to get support all around: "I hope that we can continue to strengthen this plan before it gets to my desk... We must move swiftly and boldly to put Americans back to work, and that is exactly what this plan begins to do." The bill as passed by the House includes $607 billion for infrastructure and other direct spending measures, and $212 billion in tax cuts. Earlier predictions for the tax cuts were much higher, and republicans wanted to see less spending and more tax cuts. While overall it appears that this bill will help American's keep and create jobs there is a lot of room for improvement still. Let's hope that the Senate can make that happen.

Making Work Pay Credit
Under the Ways and Means Committee, the details of the Making Work Pay Credit are still unchanged fromthe draft version. American's can expect to receive 6.2 percent of earned income or $500 ($1,000 in the case of a joint return) whichever is lower. The specifics on how this will work are still not clear, but it is apparent that this will come in the form of reduce tax withholdings over 4 months time. This amounts to around $60 per paycheck.

Stimulus Bike
So far Stimulus Bike has about 40 people make the pledge to use their tax credits towards supporting bikes either for themselves or others. This website has been featured on more than 15 other blogs now and issteadily receiving hits. Thanks for helping this resource grow! Even if you stumbled across this site just looking for stimulus details, click around and check out our resources, supported petitions, and the pledge.

Details on the "Making Work Pay" Tax Credit

American Recovery and Reinvestment Tax Act of 2009
Chairman Charles Rangel (D-NY) of the House Committee on Ways and Means has released details of the tax breaks and other benefits. This will be formally introduced within the next few days. Read what Chairman Rangel said about the benefits involved:

"The critical state of our economy calls for swift, comprehensive action and this package will provide relief to all communities and all sectors of the American economy. This recovery package will provide tremendous tax relief, health care and job training benefits for families struggling to make ends meet, while also giving businesses the boost they need to create new jobs. We have also designed specific provisions to help State and local governments fund critical infrastructure projects to improve our roads, schools, bridges and airports, while also maintaining and creating good-paying jobs for working families. This package was developed with strong coordination between the House and Senate leaders, President-elect Obama and his economic team. I look forward to working with all parties involved toward a swift passage."

The Specifics
You can download the 6 page Summary [PDF] or read the full text 328 page version if you are fluent in legalese. Download the full version here [PDF]. A portion of the tax relief summary is below:

TAX RELIEF INCLUDED IN "THE AMERICAN RECOVERY AND REINVESTMENT PLAN"
Summary: The tax provisions included in "The American Recovery and Reinvestment Plan" will provide approximately $275 billion in tax relief for individuals, businesses, and State and local governments.
Making Work Pay" tax credit. The bill would cut taxes for more than 95% of working families in the United States. For 2009 and 2010, the bill would provide a refundable tax credit of up to $500 for working individuals and $1,000 for working families. This tax credit would be calculated at a rate of 6.2% of earned income, and would phase out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 for married couples filing jointly). Taxpayers can receive this benefit through a reduction in the amount of income tax that is withheld from their paychecks, or through claiming the credit on their tax returns. This proposal is estimated to cost $145.309 billion over 10 years.