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Committee on Ways and Means
For Immediate Release
Contact: Press Office 202-225-8933
September 17, 2002
The Bush Tax Cut and the Stimulus Bill are Working!
The Bush Tax Cut
- Rebate checks stimulated the economy at an important time.
$36 billion in tax rebate checks were mailed to families in the
second half of 2001. This was the result of a retroactive tax cut
which created a new 10 percent income bracket for low-income families
and individuals. These rebate checks added significant economic
stimulus during a period of economic sluggishness and helped the
economy grow following the tragic period after September 11th.
- The marginal income tax rate cuts help all workers.
Lower tax rates mean that workers keep more of their paycheck. That
means the rewards to working are greater and therefore more workers
will enter the workforce, leading to faster growth and a higher
standard of living. The Bush tax cut provides tax relief for all
income taxpayers.
- The rate cuts are good for small business owners.
Most small businesses are sole proprietorships or partnerships. The
tax rates they face are the individual income rates, not the
corporate income rate. As a result of the rate cuts in the Bush plan,
small businesses will be better able to invest in new equipment and
expand their workforce. They will be better rewarded for their work
and the risks they take.
- The tax cut shortened the recession. As a
consequence of the Bush tax cut, the recession ended sooner and the
economy has grown faster this year than it would have otherwise. More
jobs would have been destroyed if the Bush tax cut were not law. The
boost to the economy this year as a result of the Bush tax cut has
lead to hundreds of thousands of more jobs than there otherwise would
be.
- Raising taxes by stopping the phase-in of the Bush tax cut
would cost 500,000 jobs next year alone, according to the Council of
Economic Advisors.
- The Bush tax cut reduces and eventually eliminates the
death tax. The death tax discourages new investment by small
business owners and wastes resources, which could otherwise be spent
creating new jobs. The exclusion for the death tax increases from
$700,000 prior to passage of the Bush tax cut to $1 million in 2002
and to $3.5 million in 2009. The tax is completely eliminated in
2010.
Economic Growth Insurance Bill
The economic stimulus bill significantly boosted the
weakest portion of the economy - investment. The centerpiece
of this legislation was a thirty percent accelerated depreciation
provision. In effect, accelerated depreciation lowers the cost for
businesses making new investment. This surge in investment also leads
to new jobs. As firms purchase new machines they also hire new
workers to operate these machines.
The economic stimulus bill boosted investment.
Investment in equipment and software, after declining every quarter
for a year and half, increased for the first time following the
passage of the stimulus bill, a clear sign of its effectiveness.
As a result of the stimulus to investment, this bill will
increase the growth rate of the economy this year by 0.5 percentage
points beyond what would otherwise happened and increase the number
of jobs by roughly 300,000, according to the Council of Economic
Advisers.
The bill also helps workers laid off as a result of the
weak economy in 2001 and the effects of September 11th by extending
unemployment benefits - up to 13 weeks in every State and up
to 26 weeks in high unemployment States. Already more than 2.8
million workers nationwide have been assisted, and hundreds of
thousands more will be helped through December 2002.
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