BIPARTISAN HOUSE BILL SEEKS TAX REFORM
November 3, 2004
House bill H.R. 4520, the American Jobs Creation Act of 2004, includes many fiscal reforms that supporters say will be a boom to the economy. Among the most notable:
- Export subsidies which violate World Trade Organization agreements will be repealed; since March, the European Union has levied retaliatory tariffs on more than $4 billion worth of U.S. exports.
- A net $34 billion in tax relief over ten years, in part via reducing corporate tax rates, will be provided in order to enhance global competitiveness of American businesses.
One of the new business provisions allows companies to reinvest their foreign profits back into America at a lower tax rate. Jonathan Collegio of Americans for Tax Reform says this alone could create some 500,000 new jobs over the next two years.
In addition, the new bill allows states with no state income tax to deduct their sales taxes from federal taxes. Currently, state income taxes can be deducted from federal tax returns. As a result, the seven states with no state income tax (e.g. Texas) end up paying a greater share of the federal tax burden.
Texas Comptroller Carole Keeton Strayhorn supports the new tax provision, saying it will end the discriminatory treatment of Texas taxpayers. She says it will also provide certain benefits:
- The average Texas family would save about $310 as a result of the deductibility of state and local sales taxes.
- The net tax savings would generate an estimate 16,500 new jobs and a $923 million increase in Gross State Product in 2005.
Source: John Skorburg, "House Passes Pro-Growth Tax Reforms," Heartland Institute, August 2004; and Mark Sanders, "Texas Comptroller Calls for End to Discriminatory Federal Tax Rule," Heartland Institute, August 2004.
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