Tax relief package accelerates income tax rate cuts, relieves struggling families and small businesses, and lowers the cost of capital by slashing tax rates on dividends and capital gains.
WASHINGTON – American taxpayers today won a major victory as both houses of the United States Congress passed a $350 billion tax relief package that will lower taxes on all taxpayers.
The plan accelerates President Bush\’s June 2001 income tax cuts and family tax credits, and cuts the cost of capital by lowering the top rate of taxation on dividend income from 38.6% to 15%, while lowering the top tax rate on capital gains from 20% to 15%. The plan also allows increased tax-free capital investment by small businesses, and bonus depreciation on investments paid for between 2003 and 2005.
"Taxpayers scored another major victory today, by way of the Bush Administration and the tax-cutters in Congress," said taxpayer advocate Grover Norquist, who heads Americans for Tax Reform (ATR) in Washington, DC. "The cut was half of what the President asked for, but he asked for twice what anyone expected. This is a solid tax relief package that shows commitment by this administration for a tax cut every year," he continued.
The plan will immediately phase in marginal rate cuts scheduled for later years. The new 10% tax bracket will be expanded upward from $12,000 to $14,000 for married couples and from $6,000 to $7,000 for single taxpayers. The reductions in income tax rates scheduled for 2004 and 2006 are accelerated to 2003, resulting in new rates of 25%, 28%, 33% and 35% (from 27, 30, 35 and 38.6, respectively). The bill also accelerates the reduction of the Marriage Penalty and the increase in the child tax credit from $600 to $1000 per child.
For investors and shareholders, who now make up 52% of American families and 70% of voters in the 2002 midterm elections, the bill will cut the highest tax rate on dividend income from 38.6% to 15%, and capital gains from 20% to 15%. Conservative estimates suggest that this move will increase the stock market by 6-20%, spurring the economy and benefiting all Americans.
"Should the bill have been bigger, more immediate, and permanent? Of course, but given the restraints in the budget process, this was a major victory. And with a president committed to a tax cut every year, what was left out this year will be taken up next year or the year after," concluded Norquist.