Snow Urges US Business To Lobby Congress For Tax Cuts

by Mike Godfrey, Tax-News.com, Washington

09 January 2006

US Treasury Secretary John Snow has appealed to America's business representatives to help the government convince Congress that extending President Bush's tax cuts will be crucial to sustaining America's economic momentum.

In a speech to the US Chamber of Commerce, Mr Snow described an economy that was "a picture of health" and "the envy of the world" and warned that letting the temporary tax cuts lapse, particularly those affecting investment, would in effect lead to a tax hike and kill off economic growth.

"That would be a terrible mistake, given the economic success that lower rates precipitated," he cautioned, adding that: "there is simply no reason...to accept a tax increase from the Congress. And I'm confident the President won't accept one, period."

A tax relief bill approved by the House of Representatives late last year will extend a number of personal, business and investment tax breaks, including the dividend and capital gains tax cuts by two years to the end of December, 2010. Similar proposals have been omitted from a competing Senate bill because they failed to gain enough support from Republican fiscal moderates. The two chambers are set to begin negotiations towards compromise legislation when lawmakers return from the Christmas break.

However, Mr Snow suggested that Chamber members could help to sway Congress towards enacting legislation that will extend tax cuts by lobbying lawmakers and taking the tax cut fight to "our friends on the Hill."

"They've got to make all of the President's tax cuts permanent; letting them expire would be a tax increase – there is simply no other way to put it. It quite frankly baffles me that a tax increase would be advocated by some when the success of lower taxes is so evident," he remarked.

According to Treasury estimates, the lower tax rate on dividends and capital gains will ultimately increase national output by $35 billion.

Mr Snow also spoke briefly on proposals to reform the US tax code presented by the presidential tax reform panel in November, although only to confirm that the Treasury is in no hurry to make specific recommendations to the White House.

"We only get the chance to reform the code every twenty years or so, so we've got to make sure it's done right. We're not going to rush the reform process because America deserves a tax code that meets the President's goals for fairness, simplicity, and economic growth," he noted.

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