Crossing the Finish Line on Tax Cuts

Today, the House of Representatives passed the tax relief plan, and tomorrow the Senate will follow suit. Congress and the President are sprinting across the finish line to give Americans tax relief this year.

Unfortunately, the final bill shaped up to be a lot smaller than it should be—about $318 billion over ten years instead of the President’s $726 billion proposal. There are still too many Senators who are addicted to spending, and they blocked a larger cut. Furthermore, many of these same Senators did not have the courage to permanently reduce taxes. Many of the reductions are not permanent and set to expire quickly. tax cuts are short-term and set to expire in only a few years. In fact, most of the cuts in the personal income tax rates are set to end as soon as 2004. Clearly this is not optimal tax reform.

However, while the bill is flawed it still provides a great deal of tax relief. As of today, it looks like a final bill will:

• Provide immediate and across the board reductions in income tax rates. The withholding table will be changed, which means that less money will be taken from each paycheck. This will provide 32 million Americans with an average tax savings of $1,060.

• Slash the double taxation of investment and savings by scaling back the capital gains tax and the dividend tax by over 50%. This measure will give back an average of $798 to 26 million American

• Increase the per child tax credit from $600 to $1,000, which will include the distribution of $400 checks to families this year. This will give 26 million families an extra $623 in their budgets.

• Temporarily end the marriage penalty, which will return $623 to couples.

• Grant greater tax relief for small business capital expenses

• Include Provisions for elderly taxpayers which will save 7 million senior citizens $1,088 on average.

• NOT RAISE ANY TAXES

At the end of all of the negotiating in Congress, the President didn’t get a tax cut of the size he wanted. However, because the bill is heavily frontloaded—the first two years include as much, if not more, tax relief than the President originally asked for.

There’s a reason we got this done. The grassroots action in support of tax relief was amazing. For example, on May 6th, 175 North Carolina CSE (NC CSE) members, filling up four buses, rode overnight from North Carolina to Washington, DC to join one hundred other CSE members to hear President Bush lead a rally in support of his tax cut package. In fact, on that day CSE members came in from all over the country— flying in from West Virginia, Florida, and Ohio and driving in from all across the mid-Atlantic region. CSE members enthusiastically cheered on the President as he detailed his tax plan to over 700 people at the US Chamber of Commerce. It was an important day, and Fox News and other news networks carried the event live.

President Bush told CSE and other supporters of tax relief, “You all can make a difference in this debate. Not only the people present in this room can make a difference, but people who are listening across the country can make a difference. That’s why they’ve got emails or telephones, or in some cases, buses. People on the Hill are responsive to the voice of their fellow citizens.”

CSE took the President’s message to heart. After his speech, our members jammed into a second rally up on Capitol Hill. There, House and Senate Leadership spoke on the need for tax relief and the effort to pass a tax cut bill in Congress, but because CSE was in town Congress also heard the opinions of regular Americans on the subject of tax relief.

First, NC CSE member Martha Jenkins told the crowded room how tax relief would help her young family and their small satellite dish business. Then fellow NC CSE member Bob Bateman explained that America needed tax relief to get the economy moving, and that the President’s plan is common sense. Martha and Bob stood up for what is right, and CSE is proud of them and all of our tax activists.

In fact, CSE members should all be proud Since January, CSE and our members attended or organized dozens of rallies, made thousands of phone calls, sent tens of thousands of emails, wrote letters to the editor, and stood on street corners in support of tax relief. The grassroots foundation of this organization made their voices heard in every way possible.

In January, the liberal press and the big spenders in Washington said real tax relief was “dead on arrival.” These “experts” said Congress wouldn’t pass long-term tax cuts in a soft economy. But the Washington Beltway Crowd did not understand how hard CSE members are willing to work. They didn’t comprehend that voters increasingly understand that liberating Americans from high taxes, rather than subjecting them to more government spending, is the only way to truly get the economy back on track. Now, far from being an impossibility as predicted, Congress is poised to pass the third largest income tax rate reduction in American history.

The current tax bill is only a start, but we are finally moving in the right direction towards fundamental tax reform. America needs to completely scrap the tax code and replace it with a system that is simple, low, honest, and fair. The current bill gives us a reason to be excited about the future prospects of fundamental tax reform

Next week we’ll begin to take your suggestions for the next tax cut bill!