Tax Cut Update 1

House Ways and Means Committee

Holds Hearing on Bush Tax Plan

On Tuesday, February 13, the House Ways and Means Committee held a hearing on President Bush’s tax relief proposal. Treasury Secretary Paul O’Neill and several other experts testified on the plan. Not surprisingly, the proposal was met with both applause and disapproval from committee members and guest witnesses.

In announcing the hearing, Committee Chairman Bill Thomas (R–CA) voiced his enthusiastic support for the Bush plan by saying, “The surplus means it’s time for immediate, across-the-board tax relief for all taxpayers to boost our economy, create jobs, and give Americans more confidence by returning some of their surplus taxes to help them get through these uncertain times. We need to cut taxes for working Americans.”

Likewise, Rep. Phillip Crane (R-IL.) also stated his support, noting that, “These surpluses represent property – the income and wealth of our citizens – that the federal government is taking without cause or need.”

Secretary O’Neill echoed the Congressman’s endorsement: “This isn’t just a budget surplus, it’s a tax surplus. We have no business continuing to collect more in Federal taxes than the cost of the services the government provides. If the phone company overcharged one of your constituents, you’d join them in calling for a refund. The same principle applies to this tax surplus – it’s not the government’s money, it’s the people’s money, and we should return it to them as quickly as possible.”

But the Bush proposal was not without opposition. Specifically, Ranking Member Charles Rangel (D-NY), and Rep. Jim McDermott (D-WA) were extremely vocal in their dissent. Both congressmen said the cuts were too deep and costly.

This hearing was yet another indication of how narrow the margin of victory or defeat will be for this important tax relief proposal. A single vote in the House or Senate could be the difference.

For more information on the hearing, please visit:

Senate Republicans Abandon Ship

After the show of bipartisanship that saw Sen. Zell Miller (D-GA) join the Bush tax relief plan as a cosponsor, a pair of Republican senators have since opposed the plan. Sen. Jim Jeffords (R-VT) and Sen. Lincoln Chafee (R-RI) both stated last week that they would not support the President’s plan in its current form. Both senators feel the tax cut is too large.

Additionally, Sens. Arlen Specter (R-PA) and Olympia Snowe (R-ME) have expressed concern about the size of the plan, but neither has opposed it. In fact, the Washington rumor mill is reporting that Sen. Snowe, after a meeting at the White House, is much more comfortable with the Bush tax cut plan.

However, with Senate Majority Leader Trent Lott (R-MS) pressing many key senators to join the Bush plan, the prospect of it passing are still good. Especially since Vice President Dick Cheney would cast the tie-breaking vote in the case of a 50-50 split.

For more information on the battle for tax relief in the Senate, please visit:

Progressive Caucus Releases Alternative Tax Plan

The Congressional Progressive Caucus recently released a tax plan called the American People’s Dividend. Unlike President Bush’s proposal, this plan would distribute the same size tax cut ($300 per person annually) to everyone – regardless of how much they pay in federal income taxes. Therefore, someone who currently pays no federal income tax would still receive $300 in tax “relief” for each individual in his or her household. Clearly, this is not tax relief or even a tax refund – it is merely a federal welfare program.

President Bush’s plan returns money to hard working Americans proportional to what they pay in taxes. It is an across the board tax cut that treats Americans fairly. Furthermore, it would help spur the economy by lowering marginal tax rates and encouraging entrepreneurship. Also under Bush’s plan, 6 million low-income families will no longer pay federal income taxes.