CREATING NEW JOBS
This month, Congress passed and the president signed a $350 billion jobs and economic growth package to put Americans back to work and stimulate our economy.
The legislation provides tax relief to hard working people and has several provisions to help individuals and businesses during these challenging economic times. It accelerates the 2001 marginal rate cuts, lowers the taxation of dividends and capital gains and helps small businesses by increasing expensing and depreciation levels.
How Texas Wins
Texans directly benefit from the bill because $1.3 billion in aid is allocated specifically for our state. This assistance, part of $20 billion in overall aid for states, comes at a time when the State legislature is grappling with a paralyzing budget crisis. I worked closely with my colleagues in Congress to ensure Texas received its fair share. The funding will provide approximately $570 million for Medicaid and an estimated $710 million for essential government services and unfunded mandates, which I'm hopeful will help alleviate problems in our state.
The relief will enable millions of Texans to reap benefits from rate reductions, the child tax credit increase and lower taxes on capital gains and dividends. Texans with children will gain from an increase in the child tax credit (from $600 to $1,000) beginning this summer when the IRS starts issuing advance payment checks of $400 for each child under the age of 17.
Marriage Penalty Relief
Additionally, one of the most egregious provisions of our tax code, the marriage penalty, is addressed by this legislation. I have often said that penalizing couples for saying 'I do' is fundamentally unfair, and this bill takes steps to erase that inequity and help 2.4 million Texas couples. I originally introduced legislation to alleviate the marriage penalty and am pleased it is part and parcel of this important relief package.
Reduction of Double Taxation
Another element of the bill I helped to author reduced the double taxation of dividends. Dividend income is first taxed at the corporate level and then taxed again when paid out to shareholders. Layering tax upon tax burdens hard working Americans, and especially seniors who may rely on dividend earnings to supplement their fixed incomes. The legislation takes a first step at eliminating this burdensome tax by reducing taxes on dividends paid to individuals and on capital gains from the sale of stocks and other assets to a maximum 15 percent. Despite claims that dividend income is only enjoyed by a few, more than two million Texans - one third of all filers - claimed dividend income in 2001. This bill will put more money back in their pockets.
Back to Work
At a time when too many Americans are unemployed, this jobs and growth package provides a much-needed shot in the arm, especially for small businesses, which create two-thirds of the new jobs in the United States. By increasing expensing and depreciation levels, small businessmen and women will have more cash in their coffers to expand and hire more employees. Overall unemployment rates are expected to drop by 737,000 in 2004 and 416,000 in 2005, meaning more Americans will be back on the payroll, taking care of their families and contributing to our economy and communities.
While more remains to be done and our economy is still struggling, the 2003 tax relief takes important strides to get us on the road to solid economic recovery.
May 30, 2003