Dateline: April 17, 2003
The White House this week announced details and mechanics of President Bush's proposed $550 billion tax cutting program designed to stimulate the still-sagging U.S. economy."The nation needs quick action by our Congress on a pro-growth economic package," Bush told a gathering of small business owners in Washington. "We need tax relief totaling at least $550 billion to make sure our economy grows, and American workers and American businesses need every bit of that relief now so that people who want to find a job can find one."
Having already dropped his original tax cutting proposal from $750 to $550 billion, President Bush must now negotiate with congressional leaders who have vowed to approve no more than $350 billion in tax cuts.
Details and Examples of President Bush's Tax Cut Plan
President Bush contends that his $550 billion tax cut proposal will stimulate the economy by allowing Americans to keep more of their own money to spend, save, and invest, thus creating new jobs.
The Bush proposal would provide:
- Across the board tax rate reductions that would show up in taxpayer's paychecks soon after Congress passes his plan;
- Accelerated relief from the marriage penalty for working couples;
- An increase in the child tax credit from $600 to $1,000 per child. Families would get that extra $400 per child for 2003 in a check mailed to them weeks after the bill is signed.
- An end to double taxation of dividends. The White House believes this provision will spur investment that is vital for creating new jobs; in fact, it is estimated to create nearly one-third of the new jobs that will result from the President's plan. White House economic analysts say it will also give the stock market a much needed boost, benefiting everyone who owns a 401(k) or other investment account.
- Incentives for small businesses to grow. Small businesses-America's engines of job creation-will greatly benefit under the President's plan, which triples the amount they can write off on the purchase of new equipment such as computers and machinery.
How the Plan Might Affect Your Taxes
Under the Bush tax cut plan, 92 million taxpayers would receive, on average, a tax cut of $1,083 in 2003. Taxpayers in the lowest tax brackets would receive the largest percentage reduction in their taxes. Estimates from the White House project that:
- 46 million married couples would receive an average tax cut of $1,716.
- 34 million families with children would receive from an average tax cut of $1,473.
- 6 million single women with children would receive an average tax cut of $541.
- 13 million elderly taxpayers would receive an average tax cut of $1,384.
- 23 million small business owners would receive tax cuts averaging $2,042.
- 3 million moderate-income families would see their income tax burden eliminated entirely.
A family of four with an income of $40,000 would see their federal income taxes fall from $1,178 to $45 under the President's plan.
Cutting Taxes on Dividend Income
According to White House estimates, 35 million American households that currently receive dividend income would directly benefit from the President's proposal to eliminate the double taxation of dividends.
- 26 million taxpayers would receive an average tax cut of $704 in 2003 under the dividend provision.
- 9 million seniors would receive an average tax cut of $991 in 2003 on their dividend income.
- More than 40 percent of people who receive dividends make under $50,000 a year - and three-fourths make less than $100,000 a year.
A married couple, both aged 65, with income of $40,000 (of which $2,000 is dividends and $15,000 is Social Security benefits) would see their taxes decline under the President's growth package by $380 (from $930 to $550) in tax year 2003 ? a decline of 41 percent.
Congress is expected to begin debate on the tax cut proposal after lawmakers return from the Easter recess on April 28.