Snow Speaks On Tax Reforms

by Mike Godfrey, Tax-News.com, Washington

21 November 2005

Speaking to the Tax Foundation last Thursday as debate continued in Congress over extending President Bush's flagship tax reforms, US Treasury Secretary, John Snow stressed their importance to the US economy.

"There has been much discussion in the halls of Congress in the past few days about the extension of Federal tax rates on capital gains and dividends. I'd like to take some time this morning to talk with you about the important role lower tax rates have played in strengthening our economy and creating jobs and the vital need to keep tax rates, on capital gains and dividends in particular, low to ensure continued economic growth in the future. Millions of Americans have benefited from these important tax policies either directly – through lower taxes – or indirectly through new and better jobs and greater economic security for families," he announced, continuing:

"Since the spring of 2003, when the President signed this tax relief legislation into law, our economy has tested the President's view that if we put more money in the pockets of working Americans and reduce taxes on investment, the result would be a stronger economy and millions of new jobs. The results have been clear. The U.S. economy today is performing as strongly as anyone could have anticipated: 4.2 million new jobs have been created. Real per capita income is up and the equity markets have rebounded. A couple of weeks ago we learned that the American economy grew at an impressive 3.8 percent rate for the third quarter of this year, making it the tenth straight quarter that the American economy has grown at a healthy rate of 3.3 percent or more. It's no coincidence that it was ten quarters ago that the President's tax reform plan took effect."

The Treasury Secretary went on to add that:

"The debate in Congress today is whether to keep or jettison key ingredients to continued economic growth and job creation such as reduced tax rates on capital gains and dividends. To me, the choice is obvious: failure to extend these tax reforms would take us in the wrong direction, and would have negative consequences for our economy. Americans expect and deserve that we do everything we can to keep our economy growing, promote innovation, spur the creation of new and better jobs and keep the promise of a more prosperous future for all Americans."

Concluding his speech to the Tax Foundation, Mr Snow observed that:

"As Congress considers tax reconciliation legislation this week, we should not walk away from these successful reforms. We should not raise the cost of investing here at home when we expect American companies to compete in the global economy. I strongly urge Congress to extend these reforms and keep this economy the most dynamic in the world."

On Friday, it emerged that the Senate had approved a $60 billion tax cut bill which, among other provisions, would impose a $5 billion tax on big oil companies, provide new tax breaks to help rebuild the regions of the country devastated by the hurricane and keep millions of taxpayers out of the AMT net.

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