Fact of the Day #1
WASHINGTON – In 2003 President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA). The legislation reduced the capital gains tax rate by 25 percent and substantially reduced the double tax placed on dividends. The purpose of these two provisions was more than just a lower tax burden for investors, but also to increase equity values and boost dividend income. The 2003 tax cut has been an unmitigated success and should be extended.
Four months after the passage of the tax cut, the Congressional Budget Office (CBO) predicted GDP growth would be 2.2 percent for 2003 and 3.8 percent for 2004. However, GDP finished 2003 with 3.0 percent – 80 basis points higher than CBO expected. In 2004, GDP finished 70 basis points higher than CBO predicted. The difference of 150 basis points is more than $238 billion or $1,960 per household.
Congress needs to extend the lower tax rates on dividends and capital gains.
Economic Growth Soars Following Tax Cut