Publications
Jobs and Growth Tax Relief Reconciliation Act of 2003
On May 28, 2003, President Bush signed into law the “Jobs and Growth Tax Relief Reconciliation Act of 2003” (the “Act”). Although not as large as the $726 billion tax cut originally proposed by the Bush Administration, the $350 billion Act is still the third largest tax cut in history and contains many aspects and variations of the President’s original proposal. The Bush Administration and Congress are hopeful that the Act will provide a much needed stimulus to capital investments by businesses and will further boost the struggling economy by putting more income back into the hands of individuals.
The Act contains immediate income tax relief for individuals, investors and businesses, although the tax cuts are currently scheduled to expire (i.e., “sunset”) beginning in 2011, with many provisions scheduled to expire over the next two or three years. The Act encourages capital investments by business of all sizes by providing for a 50 percent bonus depreciation deduction for certain tangible personal property placed in service during 2003 through 2005 and especially benefits small businesses who are the beneficiaries of a $100,000 first-year expense deduction for certain property placed in service during 2003 through 2005. Individuals and investors will also benefit by the Act’s reduction in marginal income tax rates, the reduced tax rate on most long-term capital gains and dividends, and from the “marriage penalty” relief provided by the Act. The Act also increases the child tax credit from $600 to $1,000 per “qualifying child” for 2003 and 2004 and, beginning in July of this year, many taxpayers will receive advance payment checks (up to $400 per “qualifying child”) with respect to the increased 2003 child tax credit.
Set forth below is a summary of the tax cuts provided by the Act, as well as our observations and planning tips.