The Bush proposal carved out money for the working poor. I' m interested in knowing who cut it out.
I do wish he'd refused to sign it.
Edit:
I cursed congress too soon.
The tax credit is still in place.
5/23/03 -- House and Senate pass Jobs and Growth Reconciliation Tax Act; President's signature expected soon.
Early in the morning of May 23, the House of Representatives by a vote of 231-200 approved the conference report for H.R.2, the "Jobs and Growth Tax Relief Reconciliation Act of 2003." This followed a contentious conference agreement that came close to deadlocking over state Medicaid spending.
The Senate started its debate on the bill at 8:30 A.M. today and quickly passed it by a vote of 51-50, with Vice President Cheney casting the tie-breaking vote. The bill is now cleared for signature by the President. See the May 22 Tax Watch entry for a description of the bill.
5/22/03 -- Tax bill conference bogs down on spending issue after deal is struck; House and Senate passage still expected before Memorial Day recess.
Late in the evening on May 21, after contentious negotiations, House Ways and Means Committee Chair Bill Thomas (R-CA) and Senate Finance Committee Chair Chuck Grassley (R-IA) reached agreement on a $350 billion tax cut package that was expected to be able to garner 50 votes in the Senate, setting up the likelihood of a tie-breaking vote for the bill by the Vice President.
The House appointed conferees today, and the House-Senate conference got underway in mid-afternoon. The conference committee was expected to report an agreement in short order, but it bogged down over the wording of a Medicaid spending provision. Despite this problem, House and Senate are expected to pass the bill before their Memorial Day recess begins at the close of business on May 23.
The tax provisions in the $350 billion conference agreement, which includes a $20 billion state aid package, are as follows:
Rate reduction for capital gains and dividends. Under current rules, an individual's adjusted net capital gain generally is taxed at a maximum rate of 20% (10% if it would otherwise be taxed at 10% or 15%) for regular tax and AMT purposes. Adjusted net capital gain is net capital gain (net long-term capital gains exceeding net short-term capital losses) less 28% rate gain (affecting collectibles and certain small business stock) and less 25% rate gain (generally, gain representing depreciation claimed on MACRS realty). Gain from property held more than five years that would otherwise be taxed at 10% is taxed at 8%, and gain from property held more than five years and the holding period for which begins after 2000, which would otherwise be taxed at 20%, is taxed at 18%.
Dividends received by an individual currently are taxed as ordinary income at rates up to 38.6% (for 2003).
Under the conference agreement:
Effective for sales and exchanges (and payments received) after May 5, 2003, and before Jan. 1, 2009, the 10% and 20% rates on adjusted net capital gain are reduced to 5% (zero, in 2008) and 15% respectively, for both regular tax and the AMT. The lower rates apply to assets held more than one year.
Effective for dividends received in tax years beginning after 2002 and before 2009, dividends received by an individual shareholder from domestic corporations are treated as net capital gain for purposes of applying the capital gain tax rates. In other words, the dividends are taxed at rates of 5% (zero, in 2008) and 15% for both regular tax and AMT purposes. Special rules and exclusions apply. For example, if a shareholder doesn't hold a share of stock for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date, dividends received on the stock aren't be eligible for capital gain rates.
Accelerated reduction of tax brackets above 15%. For 2003 and thereafter, the tax rates above 15% would be 25%, 28%, 33%, and 35% (currently, rates for 2003 above 15% currently are 27%, 30%, 35%, and 38.6%). After 2010, rates above 15% will revert to the pre-2001 EGTRRA levels.
Increased AMT exemption amounts. For 2003 and 2004, the maximum AMT exemption amount would be $58,000 for joint filers and surviving spouses and $40,250 for unmarried taxpayers, reverting to $45,000 and $33,750 after 2004.
Increased child credit, partially refundable for 2003. For 2003 and 2004, the child credit would increase to $1,000 per qualifying child (up from current law's $600 per qualifying child for 2003-2004). After 2004, the child credit would drop back to $700 per qualifying child). For 2003, the increased amount of the child credit would be paid in advance beginning in July or August 2003 on the basis of information on each taxpayer's 2002 return filed in 2003. The payments will be made in a manner similar to the advance payment checks issued by Treasury in 2001 to reflect the creation of the 10% regular income tax rate bracket.
Marriage-penalty relief. The following marriage-penalty relief provisions would apply for 2003 and 2004 only:
The basic standard deduction amount for joint returns is double the basic standard deduction amount for single returns. For tax years beginning after 2004, a joint return filer's basic standard deduction will revert to levels enacted by the 2001 EGTRRA (e.g., for 2005, to 174% of a single return filer's basic standard deduction).
The end point of the 15% tax bracket for joint returns is twice the end point of the 15% tax bracket for single returns. For tax years beginning after 2004, the end point would revert to the levels enacted by the 2001 EGTRRA (e.g., for 2005, 180% of end point of 15% tax bracket for single returns).
Recent tax stuff.
