President Bush\’s plan to eliminate double taxation of dividends an excellent long-term strategy to strengthen American economy; Democrats\’ plan neither quick-fix nor stimulus.
WASHINGTON – At 3pm today in Chicago, President Bush will give a long-awaited speech detailing his plan to stimulate the American economy. And the package, abundant with both tax relief and reform, is a godsend to taxpayers in every sector of the American economy.
The President\’s plan provides $674 billion in tax relief over 10 years, and will stimulate the economy in two ways. First, it will empower families and consumers to spend, save, and pay off debt through speeding up the tax relief passed by Congress in May of 2001. Second, it will promote capital expenditures and investment by eliminating the unfair double taxation of dividends, which can cause an effective tax of up to 60% on investments.
"The American economy is driven by consumer spending and investment, and the President\’s plan will stimulate both variables," said taxpayer advocate Grover Norquist, who heads Americans for Tax Reform (ATR) in Washington. "But lest he forget about reform, President Bush also calls to end the unreasonable double taxation of dividends, which can cause an egregious tax of up to 60% on investments. The plan will simplify and reduce taxes for millions of taxpayers, and especially senior citizens."
All taxpayers will see tax relief if the President\’s plan becomes law, as tax reductions passed by Congress in 2001 will be made effective immediately. This includes the accelerated reduction of the marriage penalty, a faster increase in the child tax credit, and immediate implementation of the new lower 10 % tax bracket.
The Democrats\’ plan, outlined by Rep. Nancy Pelosi (D-Calif.) and Robert Menendez (D- N.J.) does not go as far in tax relief, reform, or stimulus. The proposal, which will give roughly $100 billion in $300 tax credits to taxpayers, will have a difficult time stimulating a $10 trillion economy.
"Effective stimulus must be long-term stimulus," continued Norquist, "not a one-time gimmick check that people will use to pay off their credit card bills. Democrats are taking a play from Gerald Ford\’s 1975 playbook when he tried the same thing – and it failed. Even short-term stimulus must focus on increasing consumer spending and investments in the long run, and be part of a larger package," he concluded.
For more information, visit ATR\’s website at www.atr.org.