Report: Obama plan cuts taxes $300B

WASHINGTON, Jan. 4 (UPI) -- U.S. President-elect Barack Obama and Democrats in Congress are considering $300 billion in individual and business tax cuts, The Wall Street Journal reported.

The cuts would be intended in part to encourage businesses to hire workers and reduce the tax burden on middle class taxpayers, the newspaper said Sunday. The size of the tax cuts is also intended to appeal to congressional Republicans, who have expressed little support for Obama's proposal to spend hundreds of billions of dollars to stimulate the economy.

The tax cuts would amount to about 40 percent of the stimulus package, which Democrats have said could call for spending as much as $800 billion over two years.

A $300 billion tax cut would be larger than either of the two major tax cuts enacted during President George W. Bush's first term in the White House, the Journal said. The first Bush tax cut -- which amounted to $1.35 trillion over 10 years -- provided for $174 billion in cuts during the first two years of the plan, while the second Bush tax cut contained $231 billion in cuts over two years.

The plan under consideration calls for cuts for people who pay income taxes or who claim the earned-income credit. It would allow businesses to write off major losses incurred in 2008, as well as 2009 losses, retroactively to reduce tax obligations dating back five years, the newspaper said.

The proposal would make new business investment write-offs retroactive to Jan. 1, 2009, the Journal said.

The plan would also provide for a tax credit for businesses that hire new workers or call back laid off employees.