Home / World Business
Mon, May 12, 2003 - Page 12 News List

Bush says tax cut would create more employment

THANK KEYNES The tax cut bill passed in the US' House of Representatives is the subject of a vitriolic debate, which has split clearly along party lines

BLOOMBERG , WASHINGTON

US President George W. Bush said a US$550 billion tax-cut bill passed Friday by the House of Representatives would "bring immediate help throughout our economy."

Reducing taxes paid by individuals and small businesses "would leave more money in the hands of families who need it to make purchases and to pay the bills," Bush, a Republican, said in his weekly radio address. "The result will be more jobs, and that is our goal."

The House legislation, passed largely on party lines, follows the outline set by Bush, though it doesn't heed his call to abolish the tax that investors pay on corporate dividends. The measure is likely to be changed once the Senate passes its version next week and the two chambers reconcile their bills.

Bush has stepped up his focus on the economy after declaring on May 1 the end of major combat operations in Iraq. Since then, he's brought his tax-cutting message to Arkansas and California.

Today and tomorrow he'll visit New Mexico, Nebraska and Indiana as he attempts to build support among Senate Democrats including Nebraska's Ben Nelson and some reluctant Republicans, such as Maine's Olympia Snowe.

Democrats said the administration's economic plan would enlarge the US budget deficit without stimulating the economy.

"It's the opposite of recovery," the governor of New Jersey, Jim McGreevey, a Democrat, said in the party's response to Bush's address, urging more federal assistance to state governments.

"Every dollar we're in the red is a dollar that we can't invest in our economy, schools that won't be built, bridges that won't be repaired and jobs that won't be created," he said.

A government report showed claims for jobless benefits last week held for a 12th week above 400,000, a level some analysts say signals the economy is too weak to create jobs. The unemployment rate rose to 6 percent last month, matching an eight-year high.

Bush and congressional Republicans say the tax cuts are needed to create jobs and boost the US economy, which grew at a 1.6 percent annual rate in the first three months of the year.

Bush, in today's radio address, called on voters to "participate in this important debate and to make your voice heard" by contacting their representatives and senators.

The biggest component of the bill, and of Bush's plan, is a cut in taxes on dividends. The House would tie the dividend tax to capital gains, equalizing the rates for both on a scale of 5 percent to 15 percent. Dividends now are taxed as the same rate as regular income, as much as 38.6 percent.

The president had called for the dividend tax to be abolished.

The Senate plan, which was approved by the Finance Committee Friday, would allow US$500 in dividend income to be excluded from taxes, coupled with an exemption that increases from 10 percent to 20 percent over 10 years for amounts over US$500.

Bush, who is spending the weekend in New Mexico with an old friend, declined to take reporter's questions this morning as he set out for a day of golf on the high desert.

This story has been viewed 2566 times.
TOP top