News Tip: Bush Tax Cut Greater than It Appears
Tax law expert Richard Schmalbeck says the $350 billion tax cut could, because of sunset provisions in the bill, eventually cost more than $800 billion over 10 years
Tuesday, June 3, 2003
On first blush, it appears that recent Congressional approval of a $350 billion tax cut fell far short of President Bush's wishes for $726 billion in tax relief.
But a closer look at the Jobs and Growth Tax Relief Reconciliation Act of 2003 indicates the president "got his big tax bill" after all, says a Duke University law professor who specializes in federal tax law.
"In this bill, Congress consistently chose to reduce the apparent cost of the bill by the misleading and inappropriate use of sunset provisions," says law professor Richard Schmalbeck. "The reductions in rates payable on dividend and capital gain income expire at the end of 2008; the increased child credit, marriage penalty relief and alternative minimum tax relief all expire at the end of 2004; liberalized equipment expensing provisions extend only through 2005. And so on, throughout the bill.
"If the provisions are in fact made permanent (as virtually every proponent of those changes intends), the 10-year cost of the bill is estimated to be more than $800 billion, which makes it an even larger, more costly tax cut than the president sought."
Schmalbeck says the important question that remains is not whether the president got what he wanted, but rather did the American people win as well? "Or will they find that the tremendous budget deficits caused by this tax cut will leave us with a starved public sector, unable to discharge legitimate governmental functions in education, health care, income maintenance in retirement, and many others? Those are the questions Congress should have been thinking about."
Schmalbeck can be reached for additional comment at (919) 613-7078, or by e-mail at schmalbeck@law.duke.edu.
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