President Bush And Democrats Propose Competing Tax Plans -- California Capitol Hill Bulletin -- Volume 10, Bulletin 1 -- January 9, 2003

President Bush unveiled his economic plan on Tuesday, January 7, and House Democrats countered with their own plan this week. The Bush proposal would cost $674 billion over 10 years, with almost all of it going for tax reductions. The major items in the plan call for: accelerating all tax rate cuts included in the 2001 tax bill to 2003; excluding from taxable income all stock dividends; accelerating marriage penalty relief to 2003; accelerating the child credit increase to 2003; accelerating the expansion of the 10 percent tax bracket; and raising the amount for equipment purchases that small businesses can write off to $75,000. The plan also calls for personal re-employment accounts that would give unemployed individuals up to $3,000 to help defray the expenses of looking for employment.

The Democrats' proposal, on the other hand, is far smaller and is aimed at providing an immediate but temporary boost to the economy. It would cost $136 billion over 10 years, with much of the cost occurring in the first year. It proposes a one-time $300 tax rebate per person and $32 billion in business investment incentives. It would also provide $31 billion in aid to the states for homeland security costs, highway funding, Medicaid payments and aid to the unemployed. Another $18 billion would be spent to extend unemployment benefits.

Some Senate Democrats have stated that they may also offer plans in the near future.

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