2003 Capital Gains Tax Cut Paid For Itself, And More
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.
As occurred in 1997, the Congressional Budget Office and Joint Committee on Taxation grossly underestimated capital gains revenue following the tax cut. CBO forecasted after the tax cut was passed for the government to collect $42 billion, $46 billion, and $52 billion for calendar years 2003, 2004, and 2005 respectively. However, new data demonstrates that the forecasters missed their mark by $62 billion, and capital gains revenue is expected to rise even higher in 2006. This proves that the static models used to predict tax revenues fail to account for the positive effects tax cuts have on capital gains revenue.
Congress needs to extend the lower tax rates on dividends and capital gains.
Capital Gains Tax Cut More Than Paid For Itself