Another Win for the American Taxpayer
One of the biggest debates in Washington this past spring focused on how we should jump-start our sluggish economy. As my colleagues and I worked to produce a measure that would create jobs and grow the economy, I was struck by the overall direction of the debate. Just about everyone involved in crafting the economic growth package – the President, the House, the Senate, and members from both parties – agreed on one basic principle: providing tax relief was the best medicine for our ailing economy. Each economic plan proposed or voted on in Congress included some element of tax cuts. With very few exceptions, the question in our minds was not, “Should we reduce the tax burden?” Instead, the question was, “By how much should we reduce the tax burden?”
For me – someone who has never wavered in my pursuit of lower taxes for working families – this fact is a victory in itself. It’s a sign that both parties in Washington and both houses of Congress actually do “get it.” The way to stimulate a stagnant economy is not through increasing the size of the federal bureaucracy and multiplying government spending many times over. Conversely, sending more money back to those who earn it, spend it, and thus, drive the economy is the very best approach. And though there was disagreement throughout the tax debate on what the final package should look like, the fact that nearly everyone involved saw the benefit in cutting taxes is satisfying.
Now that President Bush has signed the economic growth package into law, most of us will begin to see an impact very soon. Paychecks should reflect the tax relief as soon as employers and payroll processors implement the new withholding tables. That means you do not need to take any action to benefit from the new tax relief. And for millions of working families here in Ohio and across the country, that relief can’t come soon enough.
The new tax relief law expands the 10 percent tax bracket into which every American taxpayer falls. This change was due to occur in 2008 but has been accelerated to spur economic growth right now, when we need it most. For more than 3 million married couples and single filers here in Ohio, this means they will see an increase in take home pay shortly. The new law also immediately accelerates marriage penalty relief originally scheduled to be phased-in over four years, beginning in 2005. More than 1.3 million married couples in the Buckeye State will benefit from this provision, which increases the standard deduction for joint filers to double the amount for single filers. And finally, nearly one million Ohio married couples and single parents will enjoy an immediate increase in the child tax credit – from $600 to $1,000. In fact, later this year a typical family with one child will receive a check for $400 to reflect this change. Much like the tax bracket changes I described earlier, you need to take no action if you are eligible to receive this check. They will be mailed later in the year.
For small business owners and investors, the news is just as good as it is for working families. The new law increases from $25,000 to $100,000 the amount of expenses small business owners can immediately deduct from their taxes for new equipment and technology purchases. And it also slices into the unfair double taxation on dividends (welcome news for seniors who depend on dividends as part of their income) while reducing taxes on capital gains – a proven winner for the economy (as President Clinton and Congress proved in 1997 when capital gains taxes were last cut).
This plan will give taxpayers in Ohio and throughout the nation reasonable tax relief while giving our economy a much-needed boost. Our state will rank among the top ten states with the largest tax relief from the new law, which will help create new jobs all across the Buckeye State. For those of us who have fought for lower and fairer taxes year after year, it’s a big win. And for our nation’s economy and job market, it’s even bigger.
