Outlook for Tax Cuts
November 19, 2002
President Bush's economic advisers are debating a wide range of tax cuts for individuals and businesses to stimulate the economy -- which, at present, is just bumping along.
- These include moving up to 2003 tax rate cuts for families that were scheduled to take effect in 2006 -- which, by Tax Policy Center estimates, would cost the Treasury Department $40.6 billion.
- Moving up rate cuts scheduled for 2004 to 2003 would cost $17.1 billion.
- Making Bush's 2001 tax cuts permanent could cost $600 billion -- although almost all of that is concentrated in 2011 to 2013.
Those moves would largely benefit upper-income taxpayers. But one strategy being considered at the White House is to accelerate those parts of Bush's 2001 tax cuts that mainly benefit families and lower-income workers.
- That would include speeding up relief from the so-called marriage penalty.
- It would also mean boosting the child tax credit from $600 now to as much as $1,000 next year -- which would cost an estimated $1.9 billion.
Among the business tax breaks the administration is considering is a further increase in the depreciation write-offs that Congress enacted in March. Those breaks gave businesses a guaranteed 30 percent first-year deduction for many types of business purchases. The rest of the price can be written off under the usual rules. The first-year deduction could be increased or extended beyond its current 2004 expiration date.
Source: John D. McKinnon and Shailagh Murray, "Bush Economic Advisers Debate Risky Plan for Stimulus Package," Wall Street Journal, November 19, 2002.
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