Obama's Middle Class Tax Credits: What Do They Mean for You?

The new plan changes the existing formula for determining saver's credits to 50 percent of the first $1,000 contributed, meaning that families earning up to $65,000 would see a $500 credit if they contributed at least $1,000 to their retirement savings.

The credit would be refundable: Americans who don't earn enough to pay income taxes would still have their retirement savings matched by the government.

Not all middle-class Americans, however, would see their retirement savings bolstered by the proposal. That's because current rules take the first $2,000 of individual retirement contributions -- not $1,000 per family -- into account when determining the size of a tax credit. Depending on their income, Americans can see between 10 and 50 percent of their contributions reimbursed.

So who could be hurt by the change? Take, for instance, a married couple earning total income between $33,000 and $36,000 who file a joint tax return. Under current tax rules, if each spouse contributes $2,000 to a qualifying retirement plan -- $4,000 total -- they would be eligible for a credit equal to 20 percent of their contributions, or $800. That's $300 more than the couple would receive under the administration's proposal.

If the proposal's $1,000 threshold really applies to families and not individuals, "then it's not an advantage for people at that lower level," Ochsenschlager said.

Overall, some say the credit likely won't provide an immediate boost to the economy because it would encourage saving as opposed to stimulating spending. And critics grouse that expanding the credit would result in yet another cost that the government would add to an already-ballooning deficit.

But a major benefit of the credit, said Heritage Foundation senior research fellow David John, is that it may result in a cost savings for the government in the long run: workers benefiting from the credit now may rely less on government aid once they reach retirement age.

"The question they're going to have to ask and that Congress is going to have to answer is whether or not the potential value of a saver's credit in the long run, " John said, "is worth the cost of establishing the saver's credit."

For Student Loan Borrowers: Limiting Loan Payments to 10 Percent of Income

Under another of the White House proposals, the payments for a borrower of a federal student loan would be limited to 10 percent of their income above what the administration called "a basic living allowance." For a single person with a $30,000 income and a $20,000 student loan, monthly payments would drop from $228 a month to $115 a month on a ten-year repayment plan, according to the administration's fact sheet.

Irons of the Economic Policy Institute says the cap could inject at least some more money into the economy.

For recent graduates struggling to find well-paying jobs in a tough economy, it can "help them get by for a few years until the economy improves again," he said. In the meantime, he added, graduates who find themselves with a little extra cash thanks to the cap are the "people most likely to spend that extra money."

But Heritage's J.D. Foster, a senior fellow at the the foundation, argues that "bailing out" recent college grads isn't the best way to spend government funds.

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