Congress Urged to Get Back on Productive Tax Track

The Jobs and Growth Reconciliation Tax Act of 2003 was signed into law by President Bush five years ago on May 28, 2003. This anniversary of sorts might be a good time for Congress to look at the powerful economic results of the package, and focus on getting back to small business friendly tax relief to help get the economy moving again.

In a media release noting the anniversary, SBE Council chief economist Raymond J. Keating said: "The 2003 tax cut really was key to getting the U.S. economy moving. We were experiencing a sluggish recovery coming out of the 2001 recession, and the benefits of the 2001 tax cut were too far off in the future. The pro-growth aspects of the 2003 tax relief package - namely, lower personal income, capital gains and dividend tax rates, along with expanded expensing for small business capital expenditures - were immediate and gave a jolt to investment and economic growth."

According to Keating, the tax cuts have helped the economy weather the housing and energy storms far better than we otherwise would have. But now, as Congress talks up tax hikes, and the threat looms that taxes will be increased considerably in 2011 (or perhaps earlier) additional negatives are being piled on the economy.

Small businesses and consumers are hurting right now. There is great unease about the economy, and where it is headed. Unfortunately, Congress has done nothing lately that might improve matters, but instead, federal lawmakers seem intent on making things worse.

For example, there is the general push for higher taxes. In addition to higher taxes on energy, it is very clear that a majority in this Congress favor allowing most of the 2001 and 2003 tax relief measures to expire at the end of 2010. That looming tax increase -- the largest in history -- is a major restraint on small business investment and growth.

“That's not good for the economy," said SBE Council President & CEO Karen Kerrigan.

Kerrigan added: "It's time to get back to what works on the tax front. It is not higher taxes. Instead, it's about productive tax relief. The 2003 tax relief package, signed into law five years ago today, was on target, except for being temporary. Congress needs to get back on the right tax track by making the pro-growth aspects of the 2001 and 2003 tax cuts permanent, and then building on that with fundamental tax reform."