How to Get a Tax Cut
May 7, 2003
It is a mystery why the Bush administration continues to press for full elimination of taxes on dividends when it has been clear for weeks that this is untenable, given the limited amount of revenue available under the congressional budget resolution, says Bruce Bartlett.
By continuing to press for its plan -- no matter how stupidly it is implemented, perhaps with long phase-ins and a sunset provision -- it reduces the chances of enacting good supply-side tax measures such as those proposed by Ways and Means Committee Chairman Bill Thomas (R-Calif.).
The Thomas plan calls for:
- Cutting the tax rate on both capital gains and dividends to 15 percent.
- Increasing first-year depreciation allowances on new equipment by 50 percent.
- Speeding up rate reductions, increasing the child credit and reduction of the marriage penalty.
Bartlett believes that such a plan is as solidly growth-oriented as the president's plan, but with the added virtue of being more stimulative in the short-run.
The White House should get behind the Thomas plan and start figuring out how to get as much of it as possible through the Senate, says Bartlett.
Source: Bruce Bartlett, "How to Get a Tax Break," National Center for Policy Analysis, May 7, 2003.
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