|HSLDA News||May 16, 2003|
A New Round of Pro-Family Tax Cuts
Last night, the Senate passed the Jobs and Growth Act of 2003, maintaining the components of the President's plan which most directly affect homeschooling families: elimination of the marriage tax penalty and increase of the per child tax credit.
The bill makes several pro-family provisions retroactive to January 2003 rather than delaying their implementation to the latter part of this decade. Pro-family advocates are universally pleased that the marriage penalty would be eliminated in 2003 (rather than 2010) and the per child tax credit would be increased to $1,000 (from its current $600) in 2003 rather than 2006.
In order to pass this measure, the Senate reached an internal compromise and reduced President Bush's January 7, 2003 tax cut proposal from $726 billion to $350 billion.
Besides these welcome pro-family components, the Senate bill also eliminates the double taxation on dividends. Dividends are currently taxed once as profits for corporations and secondly as income to individual investors. By taxing dividends just once the individual investor will receive far greater returns on his investment. Making stocks more attractive, from a tax perspective, will (in theory) push the value higher and provide a much needed investment boost to the economy.
In addition, on May 9 the House of Representatives passed their version of the bill, which amounted to a $550 billion tax cut. The House also passed an amendment by House Ways and Means Committee Chairman Bill Thomas to reduce the Capital Gains Tax rate to 15% and the tax on dividends to 15%. Capital gains taxes limit the availability of investment funds, which are the lifeblood of a free-market economy. It has been demonstrated that lowering the capital gains rate always results in a surge of tax receipts as people respond to the lower rate by releasing assets which were previously "locked-up." Freeing these assets will provide a much needed investment boost.
As the differences between the House and Senate bills are resolved, HSLDA continues to support the largest pro-family tax cut possible.
On May 6, the National Center for Home Education's Manager of Federal Policy and Research Caleb Kershner and Congressional Action Program Director Sarah Merhens attended a speech where President Bush advocated his new tax cut.
"The President stressed the importance of putting money back in the hands of families and consumers as key to stimulating our depressed economy," says Caleb. "With an average of 3.5 children, most homeschool families will welcome an extra $1,400 per year through the per child tax credit."
Furthermore, both Sarah's and Caleb's families are victims of the marriage tax penalty, and they—along with millions of other families—welcome the elimination of this inequitable tax.
For more information on the President's tax cut proposal, go to: http://www.whitehouse.gov/news/releases/2003/01/20030107.html.