President’s Economic Stimulus Package Signed Into Law

Washington, DC, May 23, 2003 - The Institute strongly supports the “Jobs and Growth Tax Relief Reconciliation Act of 2003” (H.R. 2), legislation recently signed into law by President Bush that is an important step in enhancing the ability of Americans to meet their own needs for long-term financial security. The Act was approved by both houses of Congress earlier this week. Among other things, H.R. 2 lowers the tax rate on capital gains and certain dividends and, through tax bracket rate reductions, lowers the backup withholding rate.

Background
H.R. 2 is the Bush Administration’s Fiscal Year 2004 Budget, which includes an economic growth package of proposals designed to reinvigorate economic recovery, create jobs, and enhance long-term economic growth. To maintain the favorable effects of the economic growth package and provide greater certainty for economic and financial planning, H.R. 2 extends several tax provisions that expire in 2003 and 2004 and permanently extends the tax cuts enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001.

ICI Position
The Institute has long supported measures to reduce the tax rate on long-term capital gains. Provisions of H.R. 2 would reduce the 20 percent tax rate to 15 percent, and would reduce the 10 percent tax rate to 5 percent through 2007 and to zero for 2008. In testimony submitted to the House Ways and Means Committee in March, the Institute stated that the dividend exclusion incorporated in H.R. 2 would help to promote economic growth and encourage savings by maximizing economic efficiencies and minimizing administrative burdens.

Related Links
Information on tax relief for mutual fund shareholders and the Institute’s support for related legislation is available on this website.