For the third year in a row, Pres. George W. Bush is set to cut taxes on working American families and businesses. A pattern is evolving from the White House that each year the President will cut taxes while moving in methodical steps toward tax reform. Yet, the 2003 tax cut proposal is by far the boldest and will have the most impact on the American economy and the standard of living for Hawaii residents. Since the passage of Pres. Bush’s 2001 tax-cut package, Hawaii’s residents have enjoyed $272 (per capita) in tax savings.
On January 7th of this year, Pres. Bush proposed to accelerate the tax cuts implemented as part of his 2001 tax cut package, abolish the double taxation of dividends, and allow small businesses to expense up to $75,000 of equipment purchases. Put simply, the tax cuts passed by Congress in 2001 were being implemented too slow and not having much of an impact. Moreover, abolishing the double taxation of dividends addresses major problems in the U.S. economy, changes corporate behavior from the recent accounting scandals, increases the sluggish stock market and provides new capital for business investment. Lastly, expensing will encourage new business spending, which is the current cause of the economic slowdown.
According to a recent Heritage Foundation analysis, the effects of the full package will yield 844,000 new jobs from 2004 through 2013, $69 billion in additional Gross Domestic Product in the next 10 years and an additional $178 billion in disposable income in 2004 alone ($121 billion each year after that until 2013). The United States House of Representatives passed the federal budget, allowing for the President’s entire economic growth package while the Senate only allowed for half this amount. While this does not indicate that the president’s tax cut package is completely lost –