Tax News:

Congress passes Economic and Security Recovery act of 2001 (10-24-2001)

The bill aiming at boosting investment and helping the economy grow by instilling number of tax relief measures, passed the House by a vote of 216 to 214. We are well on our way down the road to economic recovery, boasted congressman Mike Pence of Indiana. “To my Democratic friends, I would say, 'The time for class warfare is over.' Let us instead join forces against a common enemy for warfare of another sort.” Indeed the time to erase party lines on certain issue can’t be more appropriate then now and to join together in unity in working out the future of the American people.

This will help simulate the slowing economy, said congressman Ed Bryant of Tennessee. “This stimulus package provides two-thirds of its tax relief in the first year totaling $100 billion,” stated Representative Bryant. “This will help provide significant growth in our economy now, when we most need it. The average family of four will see an increase of $940 in 2002, due to higher wages and lower taxes. Our economic stimulus package guarantees a minimum of 118,000 jobs being created each year for the next ten years, with 167,000 jobs being created next year alone. Our Gross Domestic Product will increase by $16.3 billion a year for the next ten years, ensuring a better quality of life for every American.”

Passing out medical advice on the sluggish economy and calling the new bill the cure for the ill economy, congressman Roy Blunt was being blunt when he said, “It will take time for the American consumer outlook to recover from the events of September 11. Under the current circumstances it is government's role to help the economy be ready for renewed growth and expansion." Trying to further stimulate the stale economy under conditions brought on by the Sept. 11 attacks and the last ten years, the republicans felt this bill necessary even after passing the tax cuts asked by President Bush with the Economic Growth and Tax Relief Act of 2001.

The Economic Security and Recovery Act of 2001 (H.R. 3090) would inject $100 billion into the American economy the next year by providing additional tax rebates to low and middle-income families, speeding up individual tax rate reductions and expanding business investment opportunities. The bill also helps laid-off workers endure their furloughs by providing an extra $12 billion in unemployment benefits and health care assistance to states for disbursement to needy individuals and families.

Rate Acceleration - working families get immediate help by advancing the effective date of the 25 percent marginal rate cut from last spring’s tax bill (H.R. 1836 - the Economic Growth and Tax Relief Reconciliation Act of 2001). Instead of 2006, the new rate takes effect in 2002.

Payments for Individuals - people who received a partial rebate under this spring’s tax bill will have their payments topped up to the full $300 for individuals and $600 for couples, those who filed a tax return in 2000 but were not eligible in the previous round will now get a payment of $300 for individuals or $600 for couples. The dependents and nonresident aliens won't be eligible for the supplemental rebate.

Unemployment and Health - use of the existing social services block grant program will provide states with the flexibility to supplement current unemployment and health benefits in states where the events of September 11 have caused a spike in the number of jobless.

Deductions for Capital Losses for Individuals - the current $3,000 deduction will be increased for two years, $4,000 in the first year and $5,000 in the second, allowing individuals who have suffered losses in the current economic environment to minimize the impact of those losses.

30 Percent Expensing of Investment in Most Forms of Depreciable Property During a Three-Year Period - creating jobs and promoting business investment; small business, where most jobs are created, will particularly benefit.

Five-Year Carryback of Net Operating Loss Write-offs for Corporations and Individuals - helping to stabilize businesses affected by the current downturn by allowing them to claim refunds based on losses they’ve suffered, they can deduct against their income tax liability over the past five years, putting cash back into businesses to help them stabilize or expand.

Ending the Corporate Alternative Minimum Tax - permanently repealing the AMT and providing refunds will put resources in the hands of managers who must pay salaries and make capital investments (AMT has been one of the biggest disincentives to investment for more than a decade).

Allowing Additional Expensing for Small Businesses (AMT) - small businesses will be able to write off even more of their capital investments - $35,000 annually for two years, that money can be directly invested in paying salaries and keeping their businesses afloat through tough economic times.

Simplifying Capital Gains Taxation - repealing the five-year holding period so businesses face a lower tax burden and less paperwork.