In an attempt to spur the sagging economy, the Bush White House is considering recommending tax cuts that could go into effect as early as January 1, 2003. Top among the cuts under consideration are an immediate repeal of the marriage penalty, currently slated for repeal in 2009, and an increase in the Child Tax Credit to $1,000. The Child Tax Credit is currently $600 for each child under age 17 and is scheduled to increase to $1,000 in 2010.
Other tax relief measures under consideration for legislation in 2003 include an acceleration of the tax rate reductions slated to decrease over the next several years. The current brackets of 38.6%, 35%, 30%, and 27% will drop eventually to 35%, 33%, 28%, and 25% respectively. Some think that reduction may come sooner rather than later.
Another possible tax reduction that may be seen in 2003 is an expansion of the 10% income tax bracket. Currently the first $12,000 of taxable income is taxed at 10%. President Bush has suggested increasing the 10% bracket to include the first $14,000 of taxable income.
In addition, consideration is being given to temporarily suspending the 12.4% Social Security payroll tax, increasing the rate at which businesses can write off new equipment purchases, extending unemployment benefits, allowing higher IRA contributions, and cutting the tax on dividend income.