Letter: Senators Warner and Allen and Representative Moran re: tax reform

2 comments

1. May 22, 2003

   Mr. James Landrith
   PO Box 8208
   Alexandria, Virginia 22306

   Dear Mr. Landrith:

   Thank you for contacting my office regarding the Republican tax cut proposal. I appreciate having the benefit of your views and share your concerns.

   In January, President Bush unveiled a nearly $700 billion package which contained tax breaks that favor a small group of individuals, eliminates the tax on dividends, accelerates the implementation of certain income tax rates cuts, increases the child tax credit, and increases the tax credit for married couples. The House Republican majority trimmed the package down to $550 billion, but this revised proposal does not address the real weaknesses in the economy and does little in the way of a stimulus effect. Rather, this tax bill will create enormous deficits in a budget already plagued by deficits as far as the eye can see.

   To lower the cost of this tax proposal, the bill uses a number of budget gimmicks with major provisions scheduled to expire after just three years. This tax package offers no financial aid to states and offers little incentive for capital investment. Economic forecasters have predicted that this tax package could increase the federal debt by more than $1 trillion over the next decade, if you include interest costs necessitated by the fact that its entire cost will be borrowed from the Social Security and Medicare trust funds. On May 9, 2003, the Republican tax package was narrowly passed on a largely party-line vote of 222-203. I did not support this measure.

   I am supportive of an economic stimulus plan which will give the economy an immediate, necessary infusion that will benefit the majority of working Americans without compounding the deficit. I supported an alternative plan offered by the House Democrats which would have included short-term benefits for businesses and ailing state governments and would largely benefit middle and lower income households. Unfortunately, the Republican leadership blocked floor consideration of this measure.

   The Senate has passed $350 billion tax bill and both chambers are in the process of reconciling the differences. Please be assured that I will keep your thoughts in mind as Congress continues to consider economic growth proposals. Thank you again for contacting me on this important issue.

   Yours truly,

   James P. Moran

   JPM/jp

   Reply

2. June 5, 2003

   Mr. James Landrith
   P.O. Box 8208
   Alexandria, Virginia 22306-8208

   Dear Mr. Landrith:

   Thank you for your comments regarding tax cuts and economic stimulus legislation. I appreciate you taking the time to write and allowing me this opportunity to respond.

   On January 7, 2003, President Bush proposed a comprehensive economic stimulus package, costing an estimated $726 billion. After months of debate, on May 23, 2003, the House and Senate passed, H.R. 2, the Jobs and Growth Tax Act of 2003, with my support. The bill provides $350 billion in tax relief. President Bush signed the measure into law on May 28, 2003.

   All taxpayers will see much needed tax relief under the bill through accelerated rate reductions in all tax brackets. The legislation accelerates the phase-in of marriage penalty relief in 2003 and 2004. In addition, workers will see more money in their paychecks later this summer, as companies reduce the amount of tax withheld to reflect the reduced income tax rates. Provisions were also included to lower taxes on capital gains and stock dividends to 15%. For lower income tax payers, the rate is reduced to 5% through 2008.

   The tax package also accelerated the child tax credit from $600 to $1,000 in 2003 and 2004. However, the new law did not make the necessary technical changes in the refundability component for certain low income individuals to take advantage of the increase. I am pleased to be an original co-sponsor of legislation, S. 1162, introduced by Senator Blanche Lincoln (D-AR), that would correct the inequity and provide low income families, those who need it the most, the full tax credit.

   Tax cuts for the business community will help spur investment and enable businesses to expand and create new jobs. The bill allows firms to write off their investments more quickly and raises the amount of investment small businesses can immediately expense from $25,000 to $100,000.

   In the short term, this bill helps give the economy the boost it needs. The bill also promotes long term economic stability with provisions that will encourage business expansion, investment and new job creation.

   For additional information regarding specific provisions within the tax bill. please feel free to visit the Joint Committee on Taxation’s website at: http://www.house.gov/ict/ or visit the Internal Revenue Service website at http://www.irs.gov.

   Again, I appreciate that you have brought your concerns to my attention. I will certainly remember your suggestions and recommendations. If my office may be of future assistance in any matter, please don’t hesitate to contact me.

   With kind regards, I am

   Sincerely,

   John Warner

   JW/vas

   Reply

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