The issue
Should the federal government take the next step with tax relief by making the tax
cuts provided in the Economic Growth and Tax Relief Reconciliation Act of 2001 permanent?
Why it's important
Taxpayers received rebate checks of $300 to $600 from the Internal Revenue Service
because President Bush signed the Economic Growth and Tax Relief Reconciliation
Act of 2001 into law June 7. Because of a quirk in Senate rules regarding reconciliation
bills, the act has a procedural provision that terminates (sunsets) all its tax-relief
provisions at the end of 2010. Reps. Kenny Hulshof (R-Mo.) and Paul Ryan (R-Wis.)
have introduced HR 2316, which strikes Title IX from the act making its tax cuts
permanent, including the elimination of the estate tax. Sen. Phil Gramm (R-Texas)
is preparing to introduce a companion measure that already has more than 40 co-sponsors.
Permanent tax relief is crucial to foster economic growth and prosperity for small
businesses. Small-business owners, such as roofing contractors, pay taxes when they
earn money, when they get married and when they die. The president's tax-cut plan
is putting more money in the pockets of American workers to spend, save or reduce
their debts. With the provisions sunsetting in 2010, there is no motivation for
families and small-business owners to revise estate plans and pension programs.
It is important to note that the tax cuts passed by the House were permanent, but
as previously explained, the Senate added the sunset provision to the bill's final
version.
Although many feel the "shrinking surplus" should have some lawmakers rethinking
tax cuts, the cuts and lower interest rates will stimulate economic growth. Installing
permanency to the tax cuts will only further consumers' confidence in the economy
and allow millions of families and small-business owners to plan for the future
NRCA's position
NRCA supported the Economic Growth and Tax Relief Reconciliation Act of 2001. NRCA
belongs to the Tax Relief Coalition and Family Business Estate Tax Coalition, and
it is also working to make the tax cuts permanent.
The other side
Critics contend that permanent tax cuts will jeopardize the budget surplus.
(August 2001)