WASHINGTON – President Bush yesterday signed his $1.35 trillion tax cut into law – but the ink was barely dry when Republican leaders began calling for more, and top Democrats started hinting at rollbacks.
The 10-year tax cut, which will start with a $300 check in the mail for millions of Americans this summer, was Bush’s first big win, thanks to the Republican-run Senate and a dozen conservative Democratic senators who crossed their party leaders to support it.
Bush, at a White House victory celebration, called the tax-cut package – the largest in two decades – a well-deserved break for taxpayers.
“The surplus is not the government’s money – the surplus is the people’s money. We ought to trust them with their own money,” said Bush, who was flanked by Republicans and a handful of rebel Democrats.
The final package, which includes doubling the child-tax credit, lowering income-tax rates, easing the marriage penalty and eventual repeal of the death tax, was less than the $1.6 trillion Bush promised on the campaign trail last year.
“There’s going to be additional relief, I hope,” said Senate GOP Whip Don Nickles (Okla.).
Nickles said he hasn’t talked to brand-new Senate Majority Leader Tom Daschle (D-S.D.), who now runs the Senate show, about passing more cuts, specifically, dropping the capital-gains tax from 20 percent to 15 percent.
But he said he might try to piggyback the capital-gains tax cut onto a bill raising the minimum wage, a pet project of Daschle’s.
At the Capitol, House Democratic Leader Dick Gephardt (D-Mo.), suggested Congress may need to roll back some of the breaks, claiming the bucks might be needed for spending projects or to make up any shortfall in the projected $5.6 trillion surplus.
“Future congresses, and maybe this one, will be faced with, ‘Do we want to keep all of this?'” Gephardt said.
HIGHLIGHTS OF THE TAX CUT:
QUICKIE REBATE CHECKS
* The Treasury Department will mail out rebate checks, between late July and late September, of up to $300 for individuals, up to $600 for married couples and up to $500 for single parents, depending on their 2000 taxable income.
* More than 6 million rebate checks, totaling $2.5 billion, will be sent to New York taxpayers; 3 million checks, totaling $1.3 billion, will go to New Jersey; and Connecticut taxpayers can expect more than 1.2 million checks, totaling $552 million.
LONG-TERM BREAKS
* The Treasury Department estimates 38 million families with children will pay $1,463 less in federal income taxes, and 3.9 million individuals and families will be dropped from the tax rolls.
* Tax rates gradually drop. By 2006, the top 39.6 percent rate drops to 35 percent; the 36 percent rate drops to 33 percent; the 31 percent to 28 percent; and the 28 percent rate to 25 percent. The 15 percent rate stays the same.
* A new 10 percent tax rate, effective retroactively Jan. 1 of this year, applies to the first $6,000 of taxable income for single people, $12,000 for married couples filing jointly.
* The child credit will increase from $500 to $600 this year, and will reach $1,000 by 2010.
* The marriage penalty will be eased in 2005, with the standard deduction for married couples gradually rising to equal twice that of single taxpayers.
* The estate tax will be repealed in 2010.
* Limits on individual retirement rates will gradually rise from $2,000 to $5,000 by 2008, and the limits on 401(k) type plans will gradually rise from $10,500 to $15,000 by 2006.
* The maximum $3,000 deduction for higher-education tuition will rise temporarily to $4,000, effective between 2002-2005 for married couples earning less than $130,000.
* Most cuts will vanish at the end of 2010, unless renewed by Congress.