Byline: Bill Sammon, THE WASHINGTON TIMES
CHICAGO - President Bush yesterday called for a halt to the double taxation of dividend income, half of which goes to senior citizens, as part of a sweeping, $670 billion package to stimulate the economy.
"I proposed a bold plan because the need for this plan is urgent," Mr. Bush told the Economic Club of Chicago. "And I urge the Congress to act swiftly and pass this bill."
The president's plan includes an extension of unemployment benefits and an acceleration of Mr. Bush's 2001 tax cuts, allowing 92 million taxpayers to keep an average of $1,083 more of their income this year.
It also raises the child tax credit to $1,000 from $600 and eliminates the so-called marriage penalty by increasing the standard deduction for couples to twice that for single filers.
Democrats called the bill a giveaway to the rich. They said their own economic stimulus package - about one-fifth the size of the president's - is less likely to exacerbate deficits.
"He's speaking the rhetoric working Americans are so eager to hear but offering only words to distract from his big, new tax breaks for the wealthiest Americans," said Massachusetts Sen. John Kerry, a Democratic presidential hopeful.
The biggest component of the package by far entails ending double taxation of dividends, a move estimated as being worth $364 billion over 10 years to taxpayers.
Seeking to blunt Democratic arguments that the cut is a sop to the wealthy, Mr. Bush said it will help sustain a lot of ordinary senior citizens. He said even Americans who do not receive dividends will benefit because the cut will invigorate the stock market and create jobs, two lagging components of an otherwise growing economy.
"As it is now, many investments are taxed not once, but twice," the president said. "First, the IRS taxes the company who owns the profit. Then it taxes the investors who received the profits as dividends.
"The result of this double taxation is that for all the profit a company earns, shareholders who receive dividends keep as little as 40 cents on the dollar."Double taxation is bad for our economy," he said. "Double taxation is wrong. Double taxation falls especially hard on retired people."
Emboldened by the Republican takeover of the Senate, which was sworn in yesterday, Mr. Bush demanded immediate enactment of many aspects of his 2001 tax cuts, which were originally scheduled to phase in over a decade.
For example, he called for acceleration of an income-tax cut scheduled for 2006. It would be retroactive to Jan. 1.
"If tax relief is good enough for Americans three years from now, it is good enough for Americans today," he said, drawing applause from 2,300 business leaders. "By speeding up the income-tax cuts, we will speed up economic recovery and the pace of job creation."
But Mr. Bush was not willing to speed up elimination of the death tax, which is scheduled to linger until 2010. …