Bush Tells Nation That Congress Must Extend Tax Cuts

by Mike Godfrey, Tax-News.com, Washington

04 April 2006

United States President George W. Bush on Saturday used his weekly radio address to the nation to press his argument that Congress should extend a series of temporary tax cuts or risk destroying jobs and jeopardizing America's economic prosperity.

With the US tax filing deadline drawing near, Mr Bush used the opportunity to attack Congressional Democrats, who are arguing that the tax cuts benefit mainly the wealthiest Americans and add to the federal deficit.

"The evidence is overwhelming," Mr Bush contended.

"The opponents of tax cuts were wrong. Tax relief has helped to create jobs and opportunities for American families, and it's helped our economy grow," he stated.

According to the President, the tax relief measures passed since 2001 have boosted the incomes of workers and businesses by $880 billion and have helped the US economy grow at a faster rate than any industrialized nation in 2005.

"Because America needs more than a temporary economic expansion, we need more than temporary tax relief. To keep our economy growing, to keep our businesses investing, and to keep creating jobs, we need to ensure that you keep more of what you earn -- so Congress needs to make the tax relief permanent," Mr Bush argued.

The President stated that it is particularly important to ensure that the contentious cuts in dividend and capital gains taxes are extended beyond their end of 2008 expiry date, and urged lawmakers to legislate to at least prolong the life of these tax cuts, if not make them permanent.

"These tax cuts have been vital to our economic growth," Mr Bush continued.

"By lowering the cost of capital, this tax relief has given businesses an incentive to invest and expand, and that has helped create jobs and opportunity. I urge the Congress to extend these pro-growth tax cuts, so our businesses can plan with confidence and keep creating jobs for American workers," he added.

House lawmakers are still negotiating the final details of a $70 billion tax-cutting measure that would extend the 15% rate on dividends and most capital gains beyond 2008, but they must also reach an agreement with the Senate, which has omitted these tax cuts from its version of a tax bill in favour of a one year 'patch' to the Alternative Minimum Tax.

It has been estimated that making permanent the tax cuts passed in Mr Bush's first four years would cost $1.35 trillion over the next decade. Figures released by the US Treasury last week also showed that the government's finances worsened last month as February's deficit hit $119 billion, $5 billion higher than the same time last year. However, despite this, the President claims that the government remains on track to halve the federal deficit by 2009.

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