Tax Revenue Continues to Exceed Forecasts

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.

The debate leading into the 2003 tax cut was dominated by how much revenue the government would “lose.” However, in each of the three fiscal years since the tax cut was implemented, revenue has exceeded the 2003 forecasts made by the Congressional Budget Office, and the difference is growing larger every year. CBO revenue forecasts are often cited by those seeking to undermine tax cuts. However, it is becoming increasingly clear that their predictions are unreliable.

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

Tax Revenue Baseline Continues to Adjust Upwards