A Louisiana Republican helped move a revision to President Bush’s
tax-cut plan through a U.S. House committee Tuesday.
At the same time, a Louisiana Democrat is exploring ways to
bypass Democratic and Republican party leaders to pass a “centrist”
tax-cut bill up for consideration Thursday by the Senate Finance
At the House Ways and Means Committee, Rep. Jim McCrery, R-
Shreveport, was an advocate for Chairman Bill Thomas’ overhaul of
the original Bush proposal.
Thomas, R-Calif., put forward a plan that would deliver $550
billion in tax cuts in a 10-year span, the same figure Bush is
But Thomas’ bill would not totally eliminate the tax on stock
dividends, as Bush wants.
Instead, Thomas would reduce the tax on all capital gains and
apply the lowered capital gains tax rate to dividend income.
For dividend income, the net effect would be to reduce taxation,
but not eliminate it. Meanwhile, all taxpayers who had capital gains
of any kind would get a tax cut.
The bill also would give business owners more generous tax breaks
for equipment purchases and for depreciation than Bush initially
proposed, McCrery said.
The bill retains most of the other features of the Bush plan,
including acceleration of cuts in income tax rates, a higher child
credit and speeding up relief from the “marriage penalty” that falls
on some two-earner households.
McCrery said the size of most of those specific cuts has been
pared down from Bush’s initial proposal.
That’s because the House’s fiscal 2004 budget makes room for $550
billion in tax cuts in 10 years, while Bush originally requested
The full House is expected to vote Friday on the Ways and Means
The Senate’s budget is a more severe cutback, projecting the tax
cuts will be no more than $350 billion over 10 years.
Senate Finance Committee member John Breaux, D-La., was
instrumental in passing that lower target, saying a larger tax cut
would cause a dangerous rise in the federal deficit.
McCrery spoke Tuesday at a rally arranged by Citizens for a Sound
Economy, a business-backed and anti-tax group.
McCrery urged them to simplify their lobbying message and
concentrate on the overall size of the tax-cut package rather than
its individual parts.
“It’s important we get the largest possible tax-cut number,” he
“If the number is not high enough, there simply will not be
enough impact on the economy.”
The difference between the Senate’s $350 billion tax-cut target
and the House’s $550 billion won’t significantly influence the short-
term deficit, but will affect tax policy, McCrery said.
“It’s more important that we have a tax policy that you and other
business people know is going to be there for the next 10 years,” he
In the Senate on Tuesday, Democratic leader Tom Daschle, R-S.D.,
proposed legislation leaning more to middle- and low-income
taxpayers than to upper-income investors.
Among other things, the Daschle bill would give a $300 wage tax
credit to every worker, increase the child-tax credit, accelerate
marriage-penalty relief and give small businesses a 50 percent tax
credit for providing employee health insurance.
It also gives $40 billion in economic aid to state governments.
Simultaneously, the Republican chairman of the Finance Committee –
Iowa’s Chuck Grassley – released parts of his own proposal,
including a phased reduction in the dividend tax.
Breaux’s press secretary, Bette Phelan, said Breaux hasn’t made a
commitment to Daschle’s bill and is “much more focused on what’s unfolding at the Finance Committee.”