Bush signs tax relief legislation

Catalyst (Dublin, Ohio), July-August, 2003

President Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003, HR 2, which narrowly passed the House and Senate. HR 2 is a culmination of months of work by Congress and the Bush administration, and represents a compromise between the House and the Senate on a number of provisions designed to spur the nation's economy. Among them:

* Acceleration of certain previously enacted tax reductions, including an increase in the Child Tax Credit.

* Marriage penalty relief and reductions in individual income tax rates including an increase in the AMT exemption amounts.

* Growth incentives for business including a limited, 50 percent Special Depreciation Allowance for certain property and an increase in Section 179 expensing.

* Tax rate reductions for capital gains after May 5, 2003 to 15 percent for all but low-income taxpayers, whose rate will move to 5 percent.

* Reduction of the tax rate on dividends to 15 percent, retroactive to Jan. 1, 2003.

* Creation of a temporary state fiscal relief fund.

* Short deferral of corporate estimated taxes otherwise due Sept. 15, 2003.

Noteworthy revenue-raising provisions that were dropped from the final bill are:

* A package of tax shelter provisions that would have:

1. codified the economic substance doctrine,

2. raised the tax return position standard to "more-likely-than-not,"

3. required the CEO's signature on returns.

* A last-minute repeal ofthe section 911 foreign earned income exclusion.

This news item also ran in the Ohio e-CPA Weekly on May 26, 2003.