Congress may continue to consider fiscal stimulus as unemployment remains high even though the economy is recovering from the 2007-2009 recession and a recent provision has been acted to avert much of the so-called fiscal cliff, a set of tax increases and spending cuts. Different types of stimulus provisions were enacted in the period 2001-2008: the 2001 tax cut was aimed at individuals, but most of its provisions, especially the rate cuts, which were phased in over a number of years, were not based on the recession that was apparent in 2000 and that appeared in the spring of 2001. When concerns about the economy continued towards the end of 2001 and in 2002, the Congress enacted bonus depreciation. In February 2008, a stimulus package containing a rebate similar to the 2001 rebate, and bonus depreciation, was adopted. Bonus depreciation was extended, but that extension was largely retroactive. In December of 2010, a package that extended the Bush tax cuts for two years and provided for a one-year reduction in payroll taxes for workers was adopted ( P.L. In recent legislation, to address the fiscal cliff, most of the 2001 and 2003 tax cuts were made permanent (except for very high income taxpayers), including rate cuts and dividend reductions. Bonus depreciation was extended for a year, but the payroll tax was not extended. The findings reported below suggest that one-time rebates are effective in stimulating spending, and that the effects of tax cuts are largest in lower-income households, while provisions directed at businesses and investment income may have more limited effects. Bonus depreciation was increased to 50% in 2003 and extended through 2004. Among the business tax incentives, a temporary investment subsidy should have the most "bang for the buck." They suggest several potential reasons for a small effect. The 2008 Rebate

The February 2008 stimulus package included an individual tax rebate. It also included bonus depreciation of 50% for one year.
Although the economy is recovering from the 2007-2009 recession, unemployment continues to be high and further stimulus may be considered in the 113th Congress. Recent legislation in the American Taxpayer Relief Act of 2012 (P.L. 112-240) averted part of the so-called "fiscal cliff," a set of tax increases and spending cuts that were scheduled to occur at the beginning of 2012. Shortly a decision must be made about continuing with sequestration, a set of automatic spending cuts that were delayed by two months by P.L. 112-240. In addition, while most changes were permanent, bonus depreciation was extended for only a year.
Stimulus (or avoiding contraction) could include individual tax cuts and business tax provisions. In recent years, several different types of short run fiscal stimulus measures have been enacted: an individual income tax rebate in 2001, a temporary investment incentive (bonus depreciation) in 2002, and dividend relief in 2003. The February 2008 stimulus included a rebate, bonus depreciation, and small business expensing. A stimulus adopted in February 2009 included a large component of spending, but also extended bonus depreciation and small business expensing. It also enacted an income tax credit that was spread over two years. In December of 2010, in addition to temporarily extending the expiring Bush tax cuts and unemployment compensation, a temporary one-year payroll tax credit was adopted. This payroll credit was extended through 2012, but was not extended by P.L. 112-240.
Two types of stimulus provisions have been subject to specific empirical study. They suggest that the 2001 and 2008 rebates were an effective stimulus but bonus depreciation had a limited effect. They also suggest that tax cuts directed to lower-income households are more likely to be effective in stimulating spending. Bonus depreciation was extended for another year by P.L. 112-240, and a large share of other provisions affected high income taxpayers. Thus many of the tax increases averted by the legislation probably had small effects on the economy.