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Committee on Ways and Means
 

For Immediate Release
Contact: Press Office 202-225-8933
September 17, 2002

• Rebate checks stimulated the economy at an important time. $36 billion in tax rebate checks were mailed to families in the second half of 2001. This was the result of a retroactive tax cut which created a new 10 percent income bracket for low-income families and individuals. These rebate checks added significant economic stimulus during a period of economic sluggishness and helped the economy grow following the tragic period after September 11th.

• The marginal income tax rate cuts help all workers. Lower tax rates mean that workers keep more of their paycheck. That means the rewards to working are greater and therefore more workers will enter the workforce, leading to faster growth and a higher standard of living. The Bush tax cut provides tax relief for all income taxpayers.

• The rate cuts are good for small business owners. Most small businesses are sole proprietorships or partnerships. The tax rates they face are the individual income rates, not the corporate income rate. As a result of the rate cuts in the Bush plan, small businesses will be better able to invest in new equipment and expand their workforce. They will be better rewarded for their work and the risks they take.

• The tax cut shortened the recession. As a consequence of the Bush tax cut, the recession ended sooner and the economy has grown faster this year than it would have otherwise. More jobs would have been destroyed if the Bush tax cut were not law. The boost to the economy this year as a result of the Bush tax cut has lead to hundreds of thousands of more jobs than there otherwise would be.

• Raising taxes by stopping the phase-in of the Bush tax cut would cost 500,000 jobs next year alone, according to the Council of Economic Advisors.
• The Bush tax cut reduces and eventually eliminates the death tax. The death tax discourages new investment by small business owners and wastes resources, which could otherwise be spent creating new jobs. The exclusion for the death tax increases from $700,000 prior to passage of the Bush tax cut to $1 million in 2002 and to $3.5 million in 2009. The tax is completely eliminated in 2010.