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President Bushs 2003 Tax Cut Proposal: A Brief Overview, May 12, 2003 1 (May 12, 2003)

handle is hein.tera/crstax0433 and id is 1 raw text is: Order Code RS21420 Updated May 12, 2003 CRS Report for Congress Received through the CRS Web President Bush's 2003 Tax Cut Proposal: A Brief Overview David L. Brumbaugh Specialist in Public Finance Government and Finance Division Summary On January 7, 2003, President Bush announced the elements of a new tax cut plan intended to provide a fiscal stimulus to the economy by encouraging consumer spending and promoting investment. As initially announced, the stimulus package contained an estimated $670 billion in tax cuts over 10 years, and included acceleration to 2003 of tax cuts scheduled to be gradually phased in under the tax cut enacted in 2001; elimination of individual income taxes on corporate-source dividends and capital gains; and an increase in the expensing tax benefit for business investment. On February 3, the Administration released fiscal year (FY) 2004 budget documents providing a more comprehensive outline of the President's tax proposals. The budget proposes tax cuts totaling an estimated $1.46 trillion over 10 years. This amount includes the already- proposed stimulus package, a set of additional tax cut proposals characterized as tax incentives, and a proposal to make the expiring provisions of the 2001 tax cut permanent.' Congress began consideration of tax cut legislation similar to the President's proposal in April and May 2003. For information on congressional tax-cut legislation, see CRS Report RL31907, Tax Cut Bills in 2003: A Comparison, by David L. Brumbaugh and Don C. Richards. This report will be updated as events warrant. The Proposal's Size The Administration estimates that the tax-cut proposals in its budget will reduce federal revenue by $1.46 trillion over 10 years and by $493.4 billion over its first five years. Based on Congressional Budget Office (CBO) estimates for total revenue and gross domestic product (GDP) otherwise expected over the period, the 10-year revenue loss amounts to 5.2% of federal revenue and 1.0% of GDP. ' A detailed description of the proposals has been published by the Treasury Department in its GeneralExplanations ofthe Administration 's Fiscal Year 2004 Revenue Proposals (Washington: Feb. 2003). See [http://www.treas.gov/offices/tax-policy/library/bluebkO3.pdfl. Congressional Research Service ** The Library of Congress

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