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English, Ryan Letter to Bush on Stimulus

DEC. 6, 2002

English, Ryan Letter to Bush on Stimulus

DATED DEC. 6, 2002
DOCUMENT ATTRIBUTES
  • Authors
    English, Rep. Phil
    Ryan, Rep. Paul
  • Institutional Authors
    House of Representatives
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2002-27206 (2 original pages)
  • Tax Analysts Electronic Citation
    2002 TNT 239-21
December 9, 2002

 

The Honorable George W. Bush

 

The President of the United States

 

The White House

 

1600 Pennsylvia Avenue NW

 

Washington D.C.

 

 

Dear President Bush:

 

 

[1] As the Administration evaluates provisions for an upcoming economic stimulus package to strengthen the economy and promote job creation, we hope you will consider four specific provisions which we feel would have a positive, lasting impact on the economy. First, we would suggest a 100 percent expensing of new business investment in an effort to strengthen a struggling U.S. manufacturing sector. Second, we would encourage you to end the double taxation of corporate dividends. Third, we recommend accelerating the enacted marginal income tax rate cuts. And finally, we ask you to consider an extension of unemployment compensation to America's displaced workers.

[2] Today's economic slowdown began with a significant drop- off in business investment in 2000. According to the Joint Economic Committee, aggregate investment remains sluggish and business investment has shown slight improvements this year. Manufacturers are still struggling through more than a "soft spot" -- most are operating at below 75 percent of capacity. Although some sectors of the economy have certainly benefited from last year's economic stimulus, more remains to be done. We believe that enactment of a temporary 100 percent expensing provision would effectively jump- start business investment.

[3] Such a provision would benefit industry as a whole, and particularly medium-sized manufacturers, who create the majority of new jobs in the United States. 100 percent expensing provides a potent and efficient "bang for the buck" boost to the economy since businesses would only receive the tax break if they invest in new machinery and equipment. As you know, new business investment drives up productivity. In turn, 60 percent to 70 percent of the benefit of increased productivity goes to labor -- in the form of increased labor and wages.

[4] Another vital step to jumpstart the economy and promote investment is to eliminate the federal double taxation of corporate dividends. As a result of current law, under which dividends paid to shareholders are subject to income taxes at both the corporate and personal levels, corporations are discouraged from paying dividends to shareholders. Shareholders, in turn, are hit twice with lower dividends from their investment and additional taxes on the dividends they do receive. Eliminating the income tax burden on dividends at the corporate level and treating dividends as net capital gains at the individual level, as opposed to gross income tax treatment, would encourage corporations to distribute more dividend payments to shareholders and empower shareholders to invest more. Increasing investment is critical to any plan to strengthen the economy.

[5] In addition to ending the double taxation of corporate dividends, accelerating the enacted marginal income tax rate cuts needs to be one of the highest priorities in promoting intermediate economic growth. Given the current market conditions, working families should not be forced to keep less of their paycheck today as a result of tomorrow's phased-in reductions in their income taxes. Making that tax relief available to taxpayers now is essential to strengthening and growing the economy.

[6] We would also encourage you to consider supporting an extension of the Temporary Extended Unemployed Compensation Act (TEUCA) program, retroactive to December 28, 2002. Such an extension would provide directly needed relief to millions of American Workers displaced by the current lingering economic slowdown. Under current law, TEUCA ends just three days after Christmas -- as a result, more than 800,000 Americans will be arbitrarily cut off from their unemployment assistance. It remains difficult for these workers and many others to find employment in a slow economy, and it is therefore critical that we extend a helping hand by extending TEUCA.

[7] Thank you for considering our views on this important issue. We look forward to working with you in the coming year on this and all other matters facing the nation.

Sincerely,

 

 

Representive Phil English

 

Representive Paul Ryan
DOCUMENT ATTRIBUTES
  • Authors
    English, Rep. Phil
    Ryan, Rep. Paul
  • Institutional Authors
    House of Representatives
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2002-27206 (2 original pages)
  • Tax Analysts Electronic Citation
    2002 TNT 239-21
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