State Tax Update Archive
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Bush's Tax Plan To Aid Businesses

President George W. Bush's $1.6 trillion, 10-year plan to cut taxes may include more tax breaks for businesses.  Even if President Bush rejects such a scenario, the business community seeks action on the part of members of Congress.  Specifically, business leaders seek major changes in depreciation, a targeted means of cutting business taxes that will spur productivity and investment.  Various members of Congress have expressed interest in targeted tax cuts for businesses, including Sen. Charles Grassley (R-IA), who has voiced interest in energy breaks and retirement account reforms.  Sen. Grassley is the incoming chairman of the Senate Finance Committee.  Sen. John Breaux (D-LA) is also a member of the Senate Finance Committee and favors incentives for energy production and healthcare credits; the latter would increase the number of customers for health insurance companies, while energy production is crucial for the western power grid, in particular.

Chairman Steve Wieckert (R) and Speaker Scott Jensen (R) of the Wisconsin State Assembly have designated Bill 1 a top priority.  The legislation will limit the aggregate amount of general-purpose revenue that may be appropriated in any fiscal biennium, starting with the 2003-2005 budget.  Bill 1 will also ensure that state spending will grow no faster than the incomes of the state's residents.  Leadership support of the bill makes the likelihood of the bill becoming law better than average.

Douglas Bruce has led the fight to reduce Colorado state taxes, but recently announced that he is giving up in frustration, in part because of Amendment 23.  "I've been at this for 12 years, but I'm hanging up the plow," he said in an interview with The Wall Street Journal.  Voters in Colorado passed Amendment 23 last November, reducing future tax rebates and requiring the increase of public school spending by at least 1% above inflation every year for the next 10 years.  Gov. Bill Owens (R) has worked to make schools more accountable by pushing legislation to grade the schools, but he also may have encouraged increased spending on schools with lower grades of performance.  "Most voters believe there is a direct correlation between school funding and performance [although the actual correlation is] tenuous at best," said Gov. Owens, also in an interview with the Wall Street Journal. 

Steel producers at the very margin of solvency have stayed in business because of a federal loan guarantee that is causing the current steel glut to worsen by preventing market forces from streamlining domestic production.  The Emergency Steel Guarantee Loan program was created two years ago and offered $1 billion in loan guarantees to steel companies otherwise unable to qualify for private loans.  Sens. John D. Rockefeller IV (D) and Robert C. Byrd (D) of West Virginia contend that the $550 million already allocated and the $140 million earmarked by the 106^th Congress to cover the cost of possible loan defaults keeps many of their constituents employed.  However, Sen. John McCain (R-AZ) warned recently in a letter to President Clinton that continuing to subsidize such a plan "will eventually result in the taxpayer guaranteeing bad loans."

An additional 172 schools and 5,000 teachers will be necessary to educate 100,000 more students than currently participate in the state of Utah's public school system, if population growth estimates are correct.  The Utah legislature is considering a $2,500 tax credit for students who have not yet entered the system.  Tuition tax credtis are favorable to taxpayers who are parents of school-age children; the tax credit also will create much-needed competition for funds - competition that is stymied at the moment by the Utah Education Association's monopolistic control of education resources.

Sens. Gramm (R-Texas) and Miller (D-Ga.) were confirmed as ATR's monthly Hero of the Taxpayer for endorsing the Bush Tax Cut plan.  While Democratic Sens. Rockefeller and Byrd of West Virginia are jointly named Villain of the Taxpayer for the month of January for continuing to prop up failing steel producers.