Congress Passes Meaningful but Modest Tax Relief

Today Citizens for a Sound Economy (CSE) applauded passage of H.R. 2 (the “Jobs and Growth Tax Relief Reconciliation Act of 2003”) as a meaningful but modest step toward real tax relief for American families, but said the tax relief job is not done. CSE called for more tax relief and said that fundamental tax reform is the ultimate solution.

While this package has a smaller tax cut, doesn’t repeal the double tax on dividends, and includes an unwarranted bailout for state governments, the bill does create some incentives for more economic growth and new jobs. The accelerated marginal rate cuts, the tax breaks for individuals and small businesses, and the reduction in the tax on dividends and capital gains will bolster the economy, return money to American families, and help create new jobs. And, thankfully, the bill does not raise taxes.

The problem is that many of these tax cuts sunset in a few years, erasing any long-term positive behavioral effect they would have on the economy and on consumers. People and businesses don’t make long-term plans based on short-term tax cuts. Which highlights the real problem, a grossly complicated tax code and skewed budget process that forces passage of temporary, targeted tax cuts instead of a more simple, permanent and rational approach to tax policy.

That’s why CSE believes this tax cut should be just another step toward giving taxpayers real relief through fundamental reform of the tax code. The next step should be another tax cut next year that not only makes every rate cut permanent, but eliminates the dividend, capital gains, and death taxes completely.

President Bush has indicated that he will continue to push for more tax relief for American families and businesses. The 280,000 grassroots members of CSE are already working toward that goal and will continue do so until we have a fairer, flatter tax code.

CSE President Paul Beckner made the following comments:

“This tax cut is a meaningful, but modest step in the right direction. But more needs to be done. The fact remains that that American taxpayers and businesses send too much money to Washington. I don’t know many logical-minded people that would argue that point.

“We need more tax cuts that bring us closer to the real solution which is fundamental tax reform. You can’t get real, effective tax relief under a tax code that necessitates things like three year tax cuts.

“We need to make the income rate cuts permanent, completely do away with double taxes on things like dividends and capital gains, and finally eliminate the death tax which is the most immoral of taxes.

“President Bush insisted on tax cuts for American families and practically willed it to happen. The President wisely got what he could get this round and that’s a step toward more tax relief. If I know this President, this is a beginning, not an ending.”