Early in January, both parties in Congress got to work on
legislation intended to spur economic recovery. Quick agreement was
reached in extending unemployment benefits to June 1, 2003.
Early in January, both parties in Congress got to work on legislation intended to spur economic recovery. Quick agreement was reached in extending unemployment benefits to June 1, 2003. That $7.2 billion extension of jobless benefits was signed into law by President Bush only hours after Congressional passage. Bipartisan agreement ended there.
Democrats unveiled their tax and economic plan on Jan. 6. It included an income tax rebate to working taxpayers and an increase in the amount small businesses could immediately deduct for equipment purchases to $50,000.
A few days later, President Bush announced his plan. The cornerstone of the president’s plan is the elimination of taxes on stock dividends paid to investors. Dividends are currently subject to double taxation, once at the corporate level as income and then to the shareholders when paid out as dividends.
Another proposal in Bush’s plan would increase the equipment expensing amount for small businesses to $75,000.
The President’s proposed tax cuts for individuals include accelerating to 2003 some of the tax cuts already enacted but not scheduled to occur until next year or later. These proposed cuts include:
Increasing the child tax credit to the full $1,000 for 2003 rather than gradually increasing the credit to that amount by 2010.
Accelerating the tax rate cuts scheduled to take place in 2004 and 2006.
Expanding the 10-percent tax bracket in 2003 rather than waiting until 2008 as scheduled.
Accelerating the marriage penalty relief which was scheduled to begin in 2005.
Aware that the alternative minimum tax (AMT) is hitting more middle-income taxpayers, President Bush included in his plan an increase in the exemption amount for the AMT.
As you undertake your tax, investment, and business planning this year, stay informed about this and other pending tax legislation.
Barbara Andres is a CPA and partner with the accounting and business consulting firm of Bianchi, Lorincz & Co. in downtown Hollister and in Morgan Hill.
