Wednesday, May 14, 2003

House-passed bill accelerates tax cuts

[Congressman Mac Collins issued the following statement on the markup of the Jobs and Growth Tax Act of 2003 passed out of the Ways and Means Committee last week.]

This is a worker's bill.

For too long, opponents of tax cuts have engaged in class warfare, complaining that the benefits of the tax cuts are only distributed to the rich. They complain that 75 percent of the benefits of this tax cut go to the top 5 percent of the wage earners. What they don't talk about is how much of the taxes collected by the treasury are paid by those top 5 percent - they pay more than 75 percent of the taxes.

The bill we passed is too important for making political capital. This is a worker's bill. It makes our tax provisions competitive with other nations. Our workers are making the same product and trying to sell it to the same customer, but our tax provisions make them noncompetitive. This package will help change that.

Currently, we have the highest capital gains rates in the world. We have the highest tax rates on stock dividends. Unlike other countries, we have the Alternative Minimum Tax which penalizes individuals as well as employers trying to create jobs. We have depreciation schedules which cause business to carry assets on their books which are now obsolete. Each of these provisions drives employers out of the country, taking their jobs with them. Fixing these provisions will help American workers compete and keep these jobs in this country.

Furthermore, this bill will create more jobs and create them quickly. It is estimated that this bill will create half-a-million new jobs this year and more than 700,000 next year. This is good and necessary legislation that will benefit 92 million taxpayers in this country and will help grow the American economy which will benefit every American.

[Here are the] provisions of H.R. 2, The Jobs and Growth Tax Act of 2003:

Acceleration of 2001 Bush tax cuts for individuals

* Child credit. Increases child credit to $1,000 for 2003, 2004, and 2005.

* 10 percent bracket. Accelerates the expansion of the 10 percent bracket for 2003, 2004, and 2005.

* Marriage penalty relief. Accelerates the expansion of the 15 percent bracket and the increase in the standard deduction for married persons filing joint returns for 2003, 2004, and 2005.

* Individual rate cuts. Accelerate the 2006 individual rate cut schedule to 2003. (Rates reduced from 28 percent to 25 percent; 31 percent to 28 percent; 36 percent to 33 percent and 39.6 percent to 35 percent.)

*Increase individual AMT exemption amount. Increases the AMT exemption amount by $7,500 for single persons and $15,000 for joint filers for 2003, 2004 and 2005.

Business and investment incentives

* Bonus depreciation. Increases bonus depreciation from 30 percent to 50 percent and extend through Dec. 31, 2005.

* Small business expensing. For 2003 through 2007, increases the amount the small businesses can expense (immediately deduct) from $25,000 to $100,000. Increases definition of small business from $200,000 of capital purchases to $400,000. Provisions are indexed for inflation.

* Net operating loss carryback. Extend the 5-year net operating loss carryback for three years (2003 through 2005) and hold taxpayers harmless for AMT.

Dividends and capital gains

* Dividend and capital gain tax rate reduction 5/15. Reduces the tax rate on dividends and capital gains to 5 percent for taxpayers in the lowest tax brackets and to 15 percent for all other taxpayers.