Factbox: Tax and spending policies floating in Washington

WASHINGTON (Reuters) - President Barack Obama on Friday said he will offer a batch of new ideas to jump-start the moribund economic recovery, as the jobless rate ticked higher to 9.6 percent in August.

Congress has balked at even modest new spending initiatives in recent months and officials say the proposals are likely to be narrowly targeted.

Following is a summary of some tax and spending policies floated by administration and congressional leaders.

TAX POLICY:

INDIVIDUAL TAXES

Tax cuts for all individuals expire at year-end unless Congress takes action to extend them. Obama has stood firm on his pledge to extend the lower tax rates for what he calls the middle class -- individuals making less than $200,000 and couples earning $250,000 and under.

Obama and fellow Democrats say the wealthy are unlikely to spend the extra funds while Republicans say such individuals fuel consumption spending, investment and hiring.

Some Democrats, however, are pushing for an extension of all Bush-era tax cuts at least for another year while the economy is still on the mend.

ESTATE TAX

There is no tax on property passed from the wealthy to their heirs when they die this year, after the estate tax expired without lawmakers crafting a compromise. Obama backs reverting to 2009 law, which taxed estates after a $7 million exemption for couples at a 45 percent rate.

Republicans largely want to end the estate tax, but action is likely because under current law, the tax comes roaring back at a 55 percent rate, with just a $2 million per couple exemption level.

Reversion to the 2009 law would also have the benefit of raising billions of dollars to pay for potential tax breaks in other areas.

PAYROLL TAX HOLIDAY

A version of this break already exists in the Hiring Incentives to Restore Employment Act signed into law in March that gives tax credits to business to hire workers who have been unemployed for eight weeks or longer.

The Obama administration says businesses that qualified for the credits have hired about 5.6 million workers, but the administration has been unable to link hiring directly to the incentive.

A new version could give a break on payroll taxes, shared by workers and employers, without the need to hire new workers and extend the time period to use the credits.

Lawmakers would have to work out the accounting so the Social Security trust fund doesn't take the financial hit.

BUSINESS TAX BREAKS:

The House of Representatives has already passed a $31 billion package that renews for one year only corporate tax incentives, including a research and development tax credit and tax credits for biofuel use, that have expired.

Obama has already called for permanent extension of the R&D tax credit -- a popular idea among both political parties -- in his budget. The cost of making it permanent is $83 billion over 10 years, according to Obama administration figures.

This so-called tax extenders bill also includes tax breaks for improvements to retail business and for finance companies earning money abroad.

That Obama-backed measure, paid for by trimming international tax perks enjoyed by some of the same companies, has stalled in the Senate.

SMALL BUSINESS HELP

Obama again called for passage of a $20-30 billion bill to invest in banks with assets of less than $10 billion to spur investment in small business. Republicans have blocked the plan, calling it a waste of taxpayer funds.

The Senate is expected to take up the bill when it returns later this month from its recess.

INFRASTRUCTURE:

BUILD AMERICA BONDS

Taxable so-called Build America Bonds, created in the stimulus program last year, were designed to finance infrastructure projects. Moves to extend the program beyond December have largely stalled in Congress.

The bonds pay issuers a federal rebate of about 35 percent of interest costs, and led to $122 billion in bond sales by state and local governments since their debut in April of last year.

Obama has proposed making the program permanent and setting the subsidy level at 28 percent, a level the Treasury Department considers revenue neutral. A recent government report said more than two-thirds of the $34 billion in payments to BABS is offset by higher revenues.

INFRASTRUCTURE BANK

The Obama administration has proposed to capitalize an infrastructure bank that would help finance priority transport, water, communications, and other big-ticket construction projects. There has been little congressional interest for establishing a financing arm for infrastructure, which would be structured to attract private investment.

The administration's five-year projection is to capitalize the bank at $25 billion and Obama has sought up to $7 billion in initial funding from Congress.

TRANSPORT BILL

Obama and Congress have yet to formally propose new long-term legislation laying out transportation construction priorities. An earlier measure expired in 2009 although billions in projects were funded under economic stimulus.

A House panel has drafted a $500 billion, 6-year plan, and a similar proposal is being developed in the Senate. Congress and industry calculate that 35,000 jobs are created for every $1 billion invested in infrastructure.

FUNDS DIRECTLY TO CONSUMERS

Obama could call for lump sum rebate checks to consumers, in the hopes that they will go out and shop, adopted in a stimulus bill in 2008. But these checks sent under former President George W. Bush were widely saved and not spent.

(Reporting by Kim Dixon and John Crawley; Editing by Jerry Norton)