Senate Panel Explores Making Tax Cuts Permanent

July 1, 2005

The Senate Finance Taxation and IRS Oversight Subcommittee heard testimony yesterday on whether to make the expiring provisions in the 2001 and 2003 Bush tax cuts permanent. From Tax Analysts:

The [Bush tax] cuts were all originally enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).

The reduced 15 percent tax rate on capital gains and dividends received the most attention at the hearing.

“The 15 percent top tax rate on capital gains and dividends is a step toward fundamental tax reform,” said Stephen J. Entin of the Institute for Research on the Economics of Taxation. “It may be thought of as mitigating the double taxation of corporate income. Alternatively, it may be viewed as offsetting some of the basic income tax bias against saving, in effect extending to more saving about half of the tax relief given under Roth IRAs.”

Here’s the full testimony from the hearing. Here’s a chart of real private investment before and after the Bush tax cuts (from Stephen J. Entin’s testimony):

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