Snow Pushing For Extension Of 2003 Tax Cuts

by Mike Godfrey, Tax-News.com, Washington

16 September 2005

Extending tax cuts on dividends and capital gains is crucial for the future prospects of the US economy, and remains a priority for the Bush administration despite the disruption to the legislative agenda caused by Hurricane Katrina, United States Treasury Secretary John Snow stated this week.

"The administration supports those measures strongly and remains confident that either through (budget) reconciliation or otherwise, we're going to see those measures extended," Mr Snow told CNBC television on Wednesday.

"It's awfully important we do it because the strong economy we enjoy today is a direct result of the president's action on lowering taxes," he added.

Under the tax cuts signed by President Bush in 2003, the top rate of tax on income from capital gains and qualifying dividends was reduced to 15%. These tax cuts are set to expire in 2008, and Congressional Republicans were set to push new legislation during the fall session extending this period of relief until 2010 when Hurricane Katrina changed short term legislative priorities.

Nonetheless, in a news conference on Wednesday, Rep. Jim McCrery (R - La) chairman of the Social Security subcommittee of the tax-writing Ways and Means panel, revealed that committee members have "not abandoned" attempts to extend the 2003 tax cuts.

"We think that is critical. We have not given up on that," McCrery stated.

Meanwhile, lawmakers have turned their attention to providing immediate relief to families and business affected by the hurricane, and Congress has already approved $60 billion in emergency aid. With more aid likely to be forthcoming and some calling for a Gulf Coast 'Marshall Plan', Democrats have questioned whether more tax cuts are necessary, especially given the pressure on the federal budget.

However, some Republicans, such as House Speaker Dennis Hastert (R - Ill), believe that the need for economic stimulus in the aftermath of the hurricane is itself a reason for more tax cuts.

"We believe we need to stimulate this economy," Hastert stated.

"I think some of the things we have committed to do in this country, we'll continue to pursue," he added.

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