Bush goes for broke with $673bn boost
President George Bush tonight offered the US a $673bn (€646bn) “growth and jobs” plan to stimulate the economy.
He said his 10-year plan would reduce taxes for all Americans who pay them, brushing aside Democratic criticism that the plan favoured mainly the wealthy.
He offered a sweeping package of tax cuts and incentives that would eliminate all federal taxes on share dividends, quick tax relief for married couples and a $400 (€384)-per-child increase in the tax credit for families with children.
“We can preserve the hard won gains our economy has made and advance toward greater prosperity,” the president said at the Chicago Economic Club.
Bush said the centrepiece of his proposal – the complete elimination of federal income taxes on share dividends – would help correct an imbalance in the tax code that currently results in lower taxes on profits made from share sales and higher rates for income received in dividends.
His plan would also accelerate and make permanent tax cuts passed two years ago. “Americans deserve to know their taxes will not be taken away,” he said.
Bush asked Congress to make the tax cuts effective this year.
The price tag on the Bush plan was nearly twice as large as White House advisers had been considering as recently as a week ago, representing a go-for-broke effort by Bush to seize and control both the domestic and political agenda in the run-up to his 2004 re-election campaign.
Democrats offered their own rival plan and hurled predictable charges that Bush’s plan was a budget-buster that favoured his rich supporters.
Bush addressed 2,300 business leaders in Chicago, and many of them cheered his economic plan.
“The dividend tax cuts are a good idea – people will move more money into the market, because their earnings will be taxed less,” said Jeffrey Katz, chief executive officer of Orbitz.
John Leonard, the chief of North American equities for UBS Global Asset Management, said Bush’s growth package was ”pretty appealing.”
Eliminating double taxation on dividends “is a smart thing to do so capital can be allocated more wisely,” Leonard said. It would spur the economy by sending more money into the economy, he said.
Bush said that under present law, corporations first pay taxes on their profits, and then investors pay taxes again on the same profits when they’re distributed at dividends. Bush asked Congress to end this “double taxation” of dividends.
“One half of American households own stock, and we have an obligation to make sure American investors are being treated fairly,” Bush said.
The elimination of taxes on share dividends is the biggest element of the plan, and is estimated to cost $364bn (€350bn) over 10 years.
Bush’s plan also calls for an immediate acceleration – retroactive to January 1 – of the tax rate cuts that had been scheduled to take effect in 2004 and 2006.
Democrats offered a rival tax-cutting plan and said Bush’s favours the rich.
“The president really is investing $600bn (€576bn) on an old, old Republican theory of trickle-down economics,” said Representative George Miller. “Give it to the people who need it.”
