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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)

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