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Ryan Votes for Tax Relief to Strengthen Economy, Create Jobs

House, Senate Agree to Lower Tax on Dividends, Capital Gains; Speed Individual Rate Cuts; Boost Small Business Expensing; Provide Aid to WI, Other States

WASHINGTON – Wisconsin’s First District Congressman Paul Ryan voted today for a tax relief package to help the economy recover and create more jobs.  The legislation – the Jobs and Growth Tax Relief Reconciliation Act of 2003 – is the product of negotiations between the House and the Senate.  It includes key elements of the jobs and growth plan passed earlier this month by the House of Representatives, although in order to secure Senate approval, the tax relief previously approved by the House was pared down.  The House of Representatives today passed the compromise bill by a vote of 231-200.     

This legislation lowers taxes on dividend income and capital gains, providing relief for the 50 percent of Americans who are invested in the stock market, as well as the 70 million Americans who own their homes.  In addition, it encourages businesses to invest and expand by increasing the amount that small businesses can expense and increasing bonus depreciation.

The bill also accelerates the implementation of the tax rate cuts scheduled to take place over the next several years, boosting Americans’ take-home pay and helping numerous small-business owners – most of whom file their tax returns as individuals. 

In addition to these tax relief provisions, the legislation promises financial aid for states.  As a result, Wisconsin is expected to receive roughly $379 million in federal assistance, (an estimated $196.7 million through Medicaid and about $182 million through a flexible block grant.)

“We need a stronger, faster economic recovery that will get more people back to work here in Wisconsin and around our nation. That’s why it is crucial that we lower the heavy tax burden on job growth in this country,” Ryan said.  “Since most of the tax cuts are retroactive to the first of this year, this increases workers’ take-home pay immediately.”

“Although I am disappointed that today’s compromise tax relief is smaller than the earlier proposal we passed out of the Ways and Means committee and the House, it takes positive steps to encourage investment and help our economy recover,” Ryan said. 

“By making the income tax rate cuts kick in immediately, it means people and small businesses get to keep more of what they earn.  I believe they can put that money to better use than Washington.  And the dividends and capital gains tax relief is good news for the growing numbers of families and individuals who invest part of their savings in the market.  We should build on these pro-growth policies to promote a lasting, solid, job-filled recovery,” Ryan said.      

The Jobs and Growth Tax Relief Reconciliation Act of 2003 contains the following provisions:

Acceleration of 2001 Tax Relief for Individuals

·        Child credit.  Increases child credit to $1,000 for 2003, 2004.  Families will receive a “child credit” check this year of up to $400 per child.

·        10 percent bracket.  Accelerates the expansion of the 10 percent bracket for 2003, 2004.

·        Marriage penalty relief.   Accelerates the expansion of the 15 percent bracket and the increase in the standard deduction for married persons filing joint returns for 2003, 2004.

·        Individual rate cuts.  Accelerate the 2006 individual rate cut schedule to 2003.  (Rates reduced from 27% to 25%; 30% to 28%; 35% to 33% and 38.6% to 35%.)

·        Increase individual AMT exemption amount.  Increases the AMT exemption amount by $4,500 for single persons and $9,000 for joint filers for 2003, 2004.

Business and investment incentives

·        Bonus depreciation.  Increases bonus depreciation from 30 percent to 50 percent and extends through December 31, 2004.  (This permits businesses to write-off more than they can under current law for new equipment purchases.)

·        Small business expensing.  For 2003 through 2005, increases the amount that small businesses can expense (immediately deduct) from $25,000 to $100,000.  Increases definition of small business from $200,000 of capital purchases to $400,000.  Both amounts are indexed for inflation in 2004 and 2005.

Dividends and capital gains

·        Dividend and capital gain tax rate reduction 5/15.  For taxpayers in the lowest two tax brackets, reduces the tax rate on dividends and capital gains to 5 percent through 2007 and zero percent in 2008.  For all other taxpayers, reduces the tax on dividends and capital gains to 15 percent through 2008. 

Aid to States

·        $20 billion of help to states.  $10 billion will be delivered to states in FY2003, and an additional $10 billion will be provided in FY2004.  Wisconsin will receive an estimated $379 million over ’03 and ’04.

Yesterday, the House passed separate legislation (H.R. 2185) to extend for seven-months the current federal temporary extended unemployment compensation program.  Under this extension, dislocated workers exhausting regular state unemployment benefits through as late as December 2003 could collect federal extended benefits.  Those extended benefits would be available through as late as March 2004.  Dislocated workers who exhaust 26 weeks of regular state benefits would be eligible for 13 weeks of federal extended benefits.  An estimated 49,700 unemployed Wisconsin workers will receive extra help through this extension.

“Extending this unemployment program is a positive step, but what Wisconsin workers really want is jobs,” Ryan said.  “That’s why the tax package we approved to encourage investment and grow the economy is so important.  To move our economy forward, we need businesses to start up, expand, and hire more workers. Today’s tax legislation advances this goal.”   

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