President Bush presented his latest tax plan to Congress on Tuesday. Included in the plan are tax reductions and credits that will benefit all taxpayers.
The tax plan features the following reductions:
- An immediate elimination of federal income tax on all dividend income, retroactive to January 1, 2003.
- An immediate increase in the child tax credit for children under the age of 17 from the current $600 per child to $1,000 per child effective for tax year 2003. Parents who don't owe income taxes could receive up to $400 per child as a refundable tax rebate.
- An immediate acceleration of the tax rate cuts currently scheduled to take effect in 2004 and 2006, retroactive to January 1, 2003.
- An immediate reduction in the marriage tax penalty to take effect in 2003 instead of 2009 as currently scheduled.
- An immediate expansion for tax year 2003 of the 10% tax bracket to include individual taxpayers earning $7,000 and married taxpayers earning $14,000, up from $6,000 and $12,000 respectively.
- An immediate increase in the amount of deductible equipment purchases by small business from $25,000 to $75,000 effective for the 2003 tax year.
The plan also includes an increase in the alternative minimum tax by $4,000 for single filers and $8,000 for joint filers, effective for tax year 2003.
Many Democrats and financial analysts have already come out against the plan saying it benefits the wealthy at the expense of the poor, while corporate executives and Republican strategists are applauding the fact that there are benefits for every taxpayer.
Democrats are structuring their own plan to rival President Bush's plan. The Democrat plan will emphasize expanded unemployment benefits and another refundable tax rebate of $300 for individual taxpayers and $600 for working couples, reminiscent of the national tax rebate program in the summer of 2001.