Initiated by President George W. Bush, the Jobs and Growth Tax Act of 2003 will create an estimated 1.2 million jobs and pump $200 billion back into the private economy by the end of 2004.
The $330 billion in tax cuts -- the third largest cut in the history of the nation -- are already showing signs of working. The stock market jumped 180 points on reopening after Memorial Day and has stayed on the high note ever since. Even Federal Reserve chief Alan Greenspan said he sees indications of a "fairly marked turnaround" in our. economy, with May data suggesting it has "stabilized."
Such a surge in the markets, if sustained, will lead to enhanced business expansion, job creation and, ultimately, consumer confidence.
A closer look at the tax package shows why it's good policy for American enterprise.
The tax relief proposal provides much-needed tax relief for businesses to help create jobs today, while generating long-term economic growth for the future, and reducing two dangerous forms of taxation - capital gains and the double tax on dividends.
As you know, reducing taxes on capital gains and dividends will provide long-term benefits to the economy. During debate on the double taxation of dividends, I could find no one who would defend this practice other than say that this is the way it has always been.
Make no mistake, the Jobs and Growth Act pays attention to the economy today so our business can create jobs for the future.
Another highlight of this landmark legislation is that for bigger businesses, the measure expands the 30 percent "bonus depreciation" provisions of current law to 50 percent. This rule will permit companies to immediately deduct 50 percent of a purchase in the first year. This essentially puts business purchases "on sale" for the remainder of the bonus-depreciation window, which now extends through 2005.
This expensing provision is vital to the Telecommunications Corridor in North Texas because businesses that have delayed replacing their telecom equipment should now find it easier to make these purchases. In fact, already I'm hearing of businesses investing in new equipment. With cost recovery this fast and interest rates this low, they feel, they can't afford not to.
Another focal point of this critical legislation is that the bill increases from $25,000 in one year to $100,000 the amount of business purchases that small businesses can immediately deduct. Small business is the engine that drives the economy.
In addition, for small businesses this bill reduces rates for all American which recognizes that for sole proprietorships, the individual rate IS the corporate rate.
To learn more about the Jobs and Growth Act or any other federal matter, please contact my office at 972-470-0892.
*Congressman Johnson represents parts of Dallas and Collin Counties. www.samjohnson.house.gov
