Increased Investment Spurs Job Creation

WASHINGTON – In 2003 President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA). The legislation cut income tax rates, reduced the capital gains tax rate by 25 percent and substantially reduced the double tax placed on dividends. Immediately following the tax cut, economic growth, job creation, stock prices, dividends, and personal income skyrocketed. The 2003 tax cut has been an unmitigated success and should be extended.

We have demonstrated that the dividend and capital gains tax cuts stimulated increased investment by reducing the cost of capital. This is important because new investment requires companies to hire more workers. The chart below demonstrates that employment rises with investment, and new investment skyrocketed following the 2003 tax cut, leading to the 4.7 million new jobs created since the tax cut went into place.

Congress needs to extend the lower tax rates on dividends and capital gains.

Higher Level of Investment Leads to New Jobs for American Workers