Bush's new Plan for kicking up the economy.

[Big-G]

Stock markets respond. DOW up by 177 points.


WASHINGTON (CNN) -- President Bush will call for the elimination of federal taxes on stock dividends in the 10-year, $600 billion economic stimulus package he is scheduled to propose Tuesday, a senior administration official said.

Earlier, Bush was said to be considering a sharp reduction in taxes on dividends rather than making them tax-free. But the official said dividends are now subject to "double taxation" -- first as corporate profits, then as income to stockholders.

"It's an issue of fairness," the official said.

Congressional Democrats plan to release their own stimulus proposals Monday, which they say will place more emphasis on middle- and low-income families than the president's package.

The fight over an economic stimulus plan will likely foreshadow some campaign themes sure to emerge in the 2004 presidential race. Democrats say the administration is looking out for the rich, while Republicans decry what several have described as "class warfare."

Bush is expected to reveal his plans Tuesday afternoon in a speech in Chicago, Illinois. Administration officials say it includes tax breaks for businesses and individuals, including write-offs for businesses that purchase certain equipment. (Full story)

The package, sources said, would also provide for an increase in the child tax credit, decrease the so-called "marriage penalty" tax, direct more federal aid to needy states and extend unemployment benefits, which lapsed last month after Congress failed to approve an extension.

"The overall number is that 92 million taxpayers would receive on average a tax cut of $1,083 in 2003, based on everything the president will propose tomorrow," White House spokesman Ari Fleischer said Monday.

A proposed elimination of the tax on dividend income would be the most dramatic step. The White House hopes that cutting dividend taxes would promote investment and spur growth.

Americans with higher incomes would benefit more from a cut in the tax on dividend income because they invest more in stocks and bonds.

Figures from the Internal Revenue Service illustrate that point. The 15.2 million tax returns that reported adjusted gross incomes of less than $50,000 had a total dividend income of $26.9 billion, according to the IRS. Fewer people -- about 10 million -- reported adjusted gross incomes of between $50,000 and $100,000, but they had more in dividend income -- $27.1 billion.

The 4.8 million returns that indicated adjusted gross incomes between $100,000 to $200,000 had $23.8 billion in dividends, and the roughly 200,000 filers reporting more than $1 million in adjusted gross income had about $25.4 billion in dividends, the IRS says.

Democrats want more now
Senate Democratic Whip Harry Reid said the proposals would be "good for Wall Street," but would do little to help the average American.

"It's going to give corporate bosses some more money, but it's not going to do anything to help people in the middle class," Reid, D-Nevada, told NBC's Meet the Press Sunday. "And that's where the economic incentives must come -- to help people in the middle classes create jobs."

But Fleischer said tax cuts should go to people who pay the bulk of the taxes.

"Very often, critics of tax relief described everybody as rich in an effort to stop tax relief," he said. "I think that's been an old tactic by people who wanted to raise taxes on the American people in the first place."

Congressional sources said a Democratic counterproposal would be more expensive than the White House plan in the short term, though it would cost less in the long term -- reflecting the Democratic view that more must be done immediately to bolster the economy.

The Democratic plan likely will include a refundable tax credit, similar to the 2001 tax rebate checks, sources said. However, instead of covering only those people who pay taxes, as the 2001 rebate did, the Democratic plan also would provide the credit to those who don't pay taxes, the sources said.

http://www.cnn.com/2003/ALLPOLITICS/...lus/index.html

[Big-G]

More details tomorrow.

[desinetcharge]

I hope this isn't too little too late, Bush's record on the economy is weak. His appointments to key posts have been clowns compared to Clintons appointments.

http://news.yahoo.com/news?tmpl=stor...bush&printer=1

By SCOTT LINDLAW, Associated Press Writer

WASHINGTON - President Bush (news - web sites) put forward a "growth and jobs" economic stimulus plan on Tuesday that would accelerate income tax rate cuts for millions of Americans, wipe out all federal taxes on stock dividends and boost the child care tax credit by $400 per child to aid an estimated 34 million American families.


The administration estimated its latest economic stimulus package would carry a 10-year price tag of $674 billion, more than double what the president had been considering only a week ago.


Bush was to begin selling the plan later Tuesday in a speech to the Economic Club of Chicago.


The two major elements of the package would be a total elimination of the federal tax that investors pay on their stock dividend earnings and an immediate acceleration — retroactive to Jan. 1 — of the tax rate cuts that had been scheduled to take effect in 2004 and 2006.


Even before the administration released the details of its stimulus program, it was being attacked by Democrats who charged that it offered too little to lower income Americans while providing costly tax breaks to wealthy Americans under the guise of providing a quick jump-start to the sluggish economy.


The administration said that $102 billion of the cost of the program would occur in 2003 and the rest of the $674 billion total cost would be spread out over the next decade.


The biggest element of the package would be the total elimination of taxes on corporate dividends which the administration estimated would cost $364 billion over 10 years.


The acceleration of the tax rate cuts in the 2001 tax law would cost $64 billion while the acceleration of the child tax credit to $1,000 would cost $91 billion, according to administration's estimates of 10-year costs.


Bush's 10-year $1.35 trillion tax package that Congress passed in 2001 called for further rate cuts but not until 2004 and 2006. It also increased the per child tax credit to $1,000 but not until 2010.


All that tax relief would be moved into this year under Bush's proposal, as would tax relief to deal with the so-called marriage penalty, which the administration estimated would cost the treasury $58 billion over 10 years.


"This is a plan that provides tax relief to the working citizens," Bush said Monday. "It's a plan that is a very fair plan. It's a plan that recognizes when somebody has more of their own money, they're likely to spend it, which creates more jobs."

[Big-G]

One thing is very likely. Now that dividend income is not taxable, it should definitely push up the stock market. More investors... stronger market... better economy.... jhingalala

We can just wait and watch. But after almost 2 years of lull, this is definitely a positive, focussed effort to rev up the economy

[Zorro]

This is definitely going to make the rich richer.

The average dividend on stocks is 3%, and taxes on dividend are approx 30%

To achieve the average tax savings of approx $1000, you need to have stock worth at least $100,000. How many average americans have stocks worth $100,000?

This proposal will definitely drive up investment in the stock market, but it is not giving any immediate help to the average american. You first need to have money before you can invest in the market.

[Zen]

Bush admin. has taken real firm steps for home security, they are going to keep singing in raag 'Terrorist-Problem' but to keep the edge on democrates they decided to come up with more 'middle-class' , 'real consumer class' oriented plan - good for their image. This will help lower the pain bleeding markets and the Enron, worldCom corporate drama caused.

This was the first time they tried to address the domestic issues - What about fixing the jacked up health insurance prices and providing good Medical plans?
Oh yes, There is a really beurocaric deparment and its name is INS - they are living breathing iguanas in the govt. sector! can they be made a little more active!!

[Big-G]

Bush: Urgent need for 'bold' economic plan
Tuesday, January 7, 2003 Posted: 2:18 PM EST (1918 GMT)



Bush announces his economic stimulus plan in Chicago on Tuesday.


BUSH ECONOMIC PLAN
• Cost: $670 billion over 10 years
• Eliminates tax on stock dividends
• Tax breaks for businesses, individuals
• Increases child tax credit
• Extends unemployment benefits
• Decreases so-called marriage penalty tax
• Increases federal funds for needy states


CHICAGO, Illinois (CNN) -- President Bush on Tuesday announced a new economic plan that would cost roughly $670 billion over 10 years, offer 92 million taxpayers an average tax cut of $1,083 and create 2.1 million jobs over the next three years.

"The jobs and growth proposals I've outlined today are a focused plan to encourage consumer spending, to promote small business growth, to boost confidence in our markets and to give critical help to unemployed citizens," Bush said in a speech at the Economic Club of Chicago.

"These tax reductions will bring real and immediate benefits to middle-income Americans," the president said. "Real money to help pay the bills and push the economy forward.

"I proposed a bold plan because the need for this plan is urgent," Bush said.

Democrats are challenging the Bush administration's assumptions and also warning the plan will cause a major increase in deficit spending.

Sen. John Edwards of North Carolina, a Democratic presidential hopeful, said Bush's plan was unfairly beneficial to the wealthy.

"This plan makes no sense if what the goal is is to stimulate the economy now and do it in a way that's fiscally responsible so that we send the right signals to Wall Street and the right signals to the American people," Edwards said after Bush's address.

A centerpiece of the Bush plan, with a price tag of more than $300 billion, is a proposal to end personal income taxes on corporate dividends. The White House bills this change as a major incentive to encourage investment by individuals and businesses, which in turn would create new jobs.

The administration estimates this provision would add $20 billion to the economy in new investment and related activity.

The Bush plan calls for new incentives designed to spur business investment and for the creation of $3,000 "Personal Redeployment Accounts" to help some unemployed Americans find jobs.

States would administer the jobs program, but it would be funded with federal money. Money in the accounts could be used for child care, job training, relocation, transportation and other job-search expenses.

"If a job is attained quickly, within 13 weeks," Bush said, "the worker will be able to keep the cash balance as a re-employment bonus."

Those accounts, according to the White House, would be available to about 1.2 million Americans -- new and existing recipients of unemployment benefits who are deemed likely to exhaust those benefits before finding work, or former unemployment insurance recipients who meet certain eligibility requirements.

"I worry about people who are out of work. They need our help, both in short-term benefits and long-term opportunity," Bush said.

On the other side of Pennsylvania Avenue, House Democrats announced a one-year, $136 billion package, which they said will have a more immediate effect.

"What we've done is design a package that is front-loaded and fast-acting deliberately," U.S. Rep. John Spratt, D-South Carolina, said at a news conference. (Full story)

The Bush proposal would accelerate plans to end the so-called marriage penalty on two-earner couples, making the full implementation effective immediately instead of in 2009. The White House said 46 million married couples would benefit.

In addition, Bush wants to raise the child tax credit from $600 per child to $1,000 per child this year, instead of in 2010 as called for in the original Bush tax cut plan.

The package would extend unemployment benefits, which lapsed last month after Congress failed to approve an extension.

Administration officials said the Bush plan includes tax breaks for businesses and individuals, including write-offs for businesses that purchase certain equipment. (Full story)

Bush said his plan would cut taxes retroactively to January 1.

CNN White House correspondents John King and Suzanne Malveaux and Capitol Hill Producer Ted Barrett contributed to this report.

http://www.cnn.com/2003/ALLPOLITICS/...lus/index.html

[GpeL]

I like it.. apun ko thoda tax breaks milegaa both at corporate and individual levels.