[Congressional Record Volume 149, Number 79 (Monday, June 2, 2003)]
[Senate]
[Pages S7186-S7187]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003

  Mr. KYL. Mr. President, I rise today to express my support for H.R. 
2, the Jobs and Growth Tax Relief Reconciliation Act of 2003.
  Former President Ronald Reagan often said, ``If you want more of 
something, subsidize it. If you want less of it, tax it.'' In recent 
polls, the American people have consistently said they want more job 
creation and more economic growth. This legislation, which President 
Bush is expected to sign into law this weekend, is specifically 
tailored to achieve these very important goals--by reducing taxes in 
the right way, it will enable businesses to create jobs and it will 
spur greater economic growth. It will also help American families keep 
more of their hard-earned money to spend or save, as they see fit.
  One of the most important things the legislation does is accelerate 
the tax rate cuts already scheduled to take effect. In 2001, Congress 
passed a law that set in motion a series of income tax rate reductions 
that were scheduled to be phased in over the next several years. 
Because of the slow phase-in, the 2001 tax cuts had a muted impact on 
the U.S. economy and taxpayers felt little benefit. The bill we pass 
today will make all of those rate reductions effective this year. 
Taxpayers will see their withholding adjusted almost immediately and 
will begin reaping the benefits right away.
  A key component of this provision is that it brings the top tax rate 
down to 35 percent--the same rate that corporations pay. While 
opponents claim this will only benefit wealthy taxpayers, I suggest 
that they look at what kind of taxpayers fall into the top bracket. The 
overwhelming majority--nearly 80 percent--of taxpayers in the top 
bracket have small business income. Small businesses, which are pass-
through entities that are taxed at individual rates, are responsible 
for the creation of at least half of all jobs in the economy; reducing 
their tax burden will help them expand and create more jobs. Fairness 
and sound economics dictate that we should not tax small businesses at 
a higher rate than we tax big corporations. This bill fixes this so 
that the top small business rate will be the same as the top corporate 
rate.
  Our bill also significantly reduces the taxes individuals pay on 
dividends they receive from corporations. In order to change investment 
behavior--and we know that the ongoing economic troubles are almost 
exclusively related to a collapse in business investment, not to a 
problem of consumer demand--taxpayers must see a meaningful and 
permanent reduction in rates at the margins. The bill we pass today 
does that.
  Under current law, a corporation pays taxes on its earnings, usually 
at a rate of 35 percent, and its shareholders

[[Page S7187]]

will pay ordinary income rates--currently, the top rate is 38.6 
percent, on any dividends distributed by the corporation. President 
Bush said we should end this double taxation by eliminating entirely 
the tax on individuals. I fought hard for the original Senate bill that 
would have done this, and I still believe that is the best tax and 
economic policy. However, the conferees from the House were unwilling 
to agree. The compromise we settled on will reduce the individual tax 
rate for dividends to 15 percent--a significant improvement over 
current law. I will continue to work to eliminate the double tax on 
dividends.

  The bill we pass today also reduces the capital gains rate from 20 
percent to 15 percent, the same rate we will now apply to dividends. I 
believe this is also good policy and I hope we can work to eliminate 
the tax on capital gains too. The dividend and capital gains tax relief 
should boost stock values significantly and should make it much less 
costly for businesses to expand and create jobs. Nearly 420,000 Arizona 
taxpayers will benefit from the dividends and capital gains tax relief.
  This legislation also includes a number of provisions designed to 
provide much-needed tax relief to American families. It increases the 
child tax credit to $1,000 per child, with a good portion of the tax 
benefits being sent to families as early as this summer. It also 
provides additional relief from the marriage penalty. In Arizona alone, 
nearly 450,000 families will benefit from the child credit increase and 
more than 600,000 will benefit from the marriage penalty relief.
  As I have said, I believe this is a very good bill that will do much 
to encourage job creation and economic growth, but I believe it could 
have been better. If the House had been willing to accept some offsets, 
we could have paid for the $20 billion in temporary State aid this bill 
provides. I also believe we should have held firm to the Senate 
position and eliminated the double tax on dividends. Regardless, I am 
very proud of the business, individual and family tax relief we have 
provided in this bill.

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