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Lobbyists push for US tax cuts

"We thought it had to be large, we thought it had to be quick, we thought it had to be pretty broad-based in stimulating demand."

John T. Dillon, Business Roundtable chairman

The Business Roundtable, a lobbying group of chief executive officers representing companies with US$3.7 trillion in annual revenues, called for US$300 billion in tax cuts next year to put cash into workers' pockets.

"We thought it had to be large, we thought it had to be quick, we thought it had to be pretty broad-based in stimulating demand," said John T. Dillon, the group's chairman and chief executive officer of International Paper Co.

The proposal is six times as large as the US$51 billion stimulus package US President George W. Bush signed into law in March to help revive the economy. It is twice the government's budget deficit in the fiscal year that ended Sept. 30, and amounts to 3 percent of the US$10 trillion US economy.

Bush and his economic advisers will have no shortage of advice as they begin to craft a tax-cut package to propose next year and to satisfy growing business demands for tax relief.

The Roundtable's proposal is notable because more than half of it -- about $160 billion -- is geared to individuals at a time when economists cite lagging business investment as a constraint on economic growth. The group didn't specify what taxes should be cut to provide the remaining US$140 billion in stimulus.

Some companies are seeking a 75 percent write-off for equipment purchases and changes in rules that will require them to pay billions of dollars to shore up their pension plans.

"Business investment is going to be a major issue," said Bill Hoagland, staff director of the Senate Budget Committee in the last Congress and an aide to Senate Republican leader Trent Lott next year. "While there is growth, it seems to be anemic," he said in an interview.

The Roundtable proposes speeding up rate cuts for individuals slated to take effect in 2004 and 2006, making corporate dividends tax-free for individuals and exempting the first US$10,000 in salaries from Social Security taxes, which would save most workers about US$6 a week.

Dillon said the group chose to focus on individual tax cuts because company order books aren't growing fast enough to justify capital investments.

"We want to be sure consumers stay very, very healthy to stimulate demand," he said.

It should please congressional Republicans who may try to speed up parts of last year's tax cut for individuals that are being phased in and to make permanent provisions that are set to expire.

It may also please America's Democrats who advocate temporarily suspending Social Security and Medicare taxes, as well as boosting the minimum wage by US$1.50 and extending jobless benefits.

By leaving US$140 billion unspecified, it also leaves the door open for other business groups to weigh in.

"Our agenda is probably more focused on the business side," said Dorothy Coleman, vice president of tax policy for the National Association of Manufacturers, whose group includes members such as General Motors Corp and Exxon Mobil Corp.

These divergent interests are competing for the attention of a president whose re-election prospects in 2004 may hinge on the US economy's recovery from a recession that began in March 2001.
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