By Nicholas M. Horrock
UPI Chief White House Correspondent
From the Washington Politics & Policy Desk
Published 5/22/2003 1:18 PM
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WASHINGTON, May 22 (UPI) -- President George W. Bush said Thursday he will sign a $350 billion tax cut compromise worked out by Congress, after once calling the figure an "itty bitty" measure, apparently choosing to accept a more modest cut to avoid further delay.
The bill is expected to be on Bush's desk by Monday -- the Memorial Day holiday -- and refund checks for some taxpayers could be sent out by late summer, according to Senate aides.
"This bill I'm going to sign is good for American workers, it is good for American families, it is good for American investors and its good for American entrepreneurs and small business owners," Bush said on Capitol Hill after a meeting with Congressional leaders.
The tax cut, worked out late Wednesday by House and Senate conferees is less than half the $750 billion Bush originally sought. The House passed a $550 billion tax cut and the Senate passed a $350 billion reduction, but Senate Republican moderates threatened to hold the line at $350 billion and the delay would have meant that Congress would recess before completion.
The bill would accelerate tax cuts called for in the $1.3 trillion 2001 measure, increase child credits from $600 to $1,000, eliminate the marriage penalty and expand the 10 percent tax bracket. All these provisions would expire in 2005.
According to Senate Finance Committee aides, the paycheck withholding levels could be adjusted by July and taxpayers would see an increase in their take-home pay. About 26 million taxpayers could see a refund on child credits of $400 by the end of summer.
The most contentious measure was Bush's plan to permanently discontinue taxing corporate dividends. The compromise bill will reduce taxes on dividends and capital gains 15 percent, 5 percent on the lowest tow tax brackets which expires in 2009.
In 2009, the taxes on corporate dividends would be permanently ended for the lowest two tax brackets.
Bush was criticized by Democrats and some Republicans that this provision was favorable only to the rich.
The bill would give $20 billion to aid states many of which are strapped for resources as tax revenues faltered in the bad economy.
The bill increases the small business deduction limit for equipment purchases to $100,000 to encourage entrepreneurs and raise the amount firms can depreciate equipment from 30 percent to 50 percent of its value.
The Democrats opposed the tax cut on the grounds that coupled with the war and Bush's first tax cut it would accelerate the growth of the country's $6 trillion deficit.