President Bush's tax-relief plan, April 2001
The issue
Should the federal government give tax relief through across-the-board cuts in marginal
rates, the death tax repeal and standard deduction increases for married couples?
Why it's important
President Bush's tax cut proposal will reduce the burdens of income tax, marriage
penalty and death tax for U.S. citizens. Tax relief is crucial to foster economic
growth and prosperity for small businesses, such as roofing contractors. The president's
plan will begin to restore consumer and business confidence and to recharge durable,
long-term economic growth. It is a fair and responsible plan to provide tax relief.
The president's plan contains the following key provisions that:
- Reduce income taxes
- Replace the current five-rate tax structure with four lower rates - 10 percent,
15 percent, 25 percent and 33 percent
- Double the child tax credit to $1,000
- Reduce the marriage penalty
- Expand the deduction for charitable donations
- Cut taxes for businesses that pay taxes at individual rates, such as S corporations
and partnerships. Businesses can use these savings to expand operations or hire
more workers.
- Eliminate the death tax that will allow family businesses to expand instead of closing.
With rates as high as 55 percent, the federal estate and gift taxes force families
to sell a business when an owner dies. Even before death, many business owners are
forced to adopt estate-planning strategies that are costly, cumbersome and time-consuming.
- Install a permanent research and development tax credit that is a proven incentive.
With a guaranteed credit, firms will be better able to plan for and invest in long-term
research and development projects.
NRCA's position
As a member of the Tax Relief Coalition, NRCA supports the president's $1.6 trillion
tax-cut package in its entirety. In April, all three parts of the president's plan
passed the House and moved to the Senate to be considered by the Senate Finance
Committee. The House bills, Economic Growth and Tax Relief Act of 2001 (HR 3), Marriage
Tax Elimination Act of 2001 (HR 6), and Death Tax Elimination Act (HR 8), will be
consolidated into one bill and debated on the Senate floor later this year.
The other side
Critics of the president's tax-relief plan contend the proposed cuts will jeopardize
the budget surplus. Other opponents of the plan would rather increase funding of
various federal programs.
(April 2001)