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Jobs and Growth Tax Relief Reconciliation Act of 2003

From Academic Kids

The Jobs and Growth Tax Relief Reconciliation Act of 2003 was passed by the United States Congress on May 23, 2003 and signed by President Bush five days later.

Among other provisions, the act accelerated certain tax changes passed in the Economic Growth and Tax Relief Reconciliation Act of 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains.

There was considerable controversy over who benefitted from the tax cuts. Bush's supporters and proponents of lower taxes claimed that the tax cuts increased the pace of economic recovery and job creation. His opponents, for their part, charged that the cuts favored the wealthy and special interests. Supporters argued that the economy was already slowing down when Bush took office and that little of the economic downturn of 2002 was due to Bush's agendas when considering lag time in the effects of policy changes on the economy. Critics argued that the tax cuts disproportionately benefitted the wealthy, although this was also controversial. In terms of the progressivity of the tax code, the cuts appeared to have been largely neutral, although opponents claim that the reductions in capital-gains tax rates are likely to disproportionately benefit wealthy investors, despite capital-gains rates being cut much further for lower-income individuals.

The Congressional Budget Office estimated that the tax cuts would increase budget deficits by $60 billion in 2003 and by $340 billion by 2008. Supporters of the president argue that this analysis ignores the potential growth that the act could encourage. (It is worth noting that the Bush administration has used "dynamic scoring"--taking potential behavior changes caused by the act into account in estimating the act's consequences--to forecast lower deficits than independent economists do; every year, the administration has forecast lower deficits, and it has been wrong every year, as the actual deficits far outpaced the administration's forecasts.) Supporters also argue that this would be further supported by analyzing the effect of the economic shock of the terrorist events of September 11, 2001. The terrorist fears, resulting reduction in travel and consumer expenditure, and increased security expenditures, they say, are a prime example of an economic cost shock, and they suggest that the recession of 2001 and 2002 would have been drastically worse had no attempts at promoting economic growth by reducing taxes been made, though there is no empirical evidence to support this claim (nor could there be). The lag between policy making and economic impact suggests the possibility to be remote.

Contents

Congressional action

Final House vote:

Vote by Party Yea Nay
Republicans 224 99.6% 1 0.4%
Democrats 7 3.4% 198 96.6%
Independents 0 0.0% 1 100%
Total 231 53.6% 200 46.4%
Non-voting: 4 Republicans

Final Senate vote:

Vote by Party Yea Nay
Republicans 48 3
Democrats 2 46
Independents 0 1
Vice President: Yea
Total 51 50

Tax brackets for single filers

Ordinary taxable income for use in filing returns due April 15, 2005: (1) (http://taxes.yahoo.com/rates.html)

Income level Tax rate
up to $7,150 10%
$7,151 - $29,050 15%
$29,051 - $70,350 25%
$70,351 - $146,750 28%
$146,751- $319,100 33%
over $319,100 35%

See also

External links

Template:US tax acts

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