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190 IRET Congressional Advisory 1 (2005)

handle is hein.taxfoundation/iretcgadv0187 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. Advisory No. 190 Extending the Fifteen Percent Tax Rate on Dividends and Capital Gains Statement of Stephen J. Entin President & Executive Director Institute for Research on the Economics of Taxation before the United States Senate Committee on Finance Subcommittee on Taxation and IRS Oversight Hearing on Encouraging Savings and Investment: Stay the Course or Change Direction? June 30, 2005 Several provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, as amended by the Jobs and Growth Tax Relief Reconciliation Act of 2003, helped to end the recession by turning around a severe slump in investment. Three key provisions either have expired, or soon will expire, if not extended by the Congress. The 15% top tax rates on dividends and capital gains, enacted in 2003, will expire at the end of 2008. The marginal income tax rate cuts enacted in 2001, and accelerated to full effect in 2003, will expire at the end of 2010. The 50% expensing provision in the 2003 Act was billed as a temporary jump start for investment and the recovery, and was allowed to expire at the end of 2004. The expected future tax treatment of saving and investment affects saving and investment being done today. Allowing the remaining investment-related provisions to expire would jeopardize the economic recovery. Extending them now, rather than waiting until the last minute, would reduce uncertainty as to whether the more favorable tax treatment will be available for investments whose lives extend beyond the sunset dates of the tax provisions. Immediate extension would boost investment spending, employment, and wages starting now, not three to five years down the road. S3.I AlA S I 66. 6 A~

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