Republicans Forge $70 Billion Measure To Extend Investor Tax Cuts
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WASHINGTON – Republicans in Congress reached agreement yesterday on a five-year, $70 billion measure to extend tax breaks for investors and prevent more middle-income families from being hit by a tax aimed at the wealthy.
The bill would hand President Bush one of his top tax priorities, a two-year extension of the reduced 15% tax rate for capital gains and dividends, currently set to expire at the end of 2008. Republicans credit the tax cuts, enacted in 2003, with boosting economic growth and creating many jobs.
Treasury Secretary John Snow said the 2003 bill “by reducing the taxes on investment, ushered in a period of rising business investment, strong (gross domestic product) growth. …When you get investment occurring and strong GDP growth, you get jobs.”
The measure also would keep 15 million families from being hit this year with the alternative minimum tax, which was designed to make sure the wealthy paid taxes but is ensnaring more and more middle-income families because it is not indexed for inflation.
The accord paves the way for House approval of the measure today. The Senate could clear the bill for Mr. Bush’s desk by week’s end.
“This is a responsible bill that protects families and small business own ers from tax increases, while also providing investors with a bigger window of certainty – critical to continued economic growth,” said House Ways and Means Committee Chairman Bill Thomas, a Republican of California.
Critics, including many Democrats, have attacked the tax rate reductions on dividends and capital gains as being largely tilted to the wealthy and have argued that the provisions should not be extended at a time of large budget deficits and massive spending for the war in Iraq.
The development capped weeks of often difficult talks between GOP lawmakers as they wrangled over how to advance their party’s tax agenda. Under budget rules, up to $70 billion in cuts can be advanced under fast-track rules that would prevent a possible filibuster by Senate Democrats.