If the economy does not get a jumpstart from front-loaded cuts in the Jobs and Growth Tax Relief Reconciliation Act of 2003 and make the economy hum again for two or three years, the bill will come due in the form of a widening federal debt load in three or four years, and the economy could be saddled with some serious financial problems.

Congress, divided on party lines, created a piece of legislation with so many tax breaks that the economy could ultimately be hobbled by it. Republicans shrewdly packed just about all of the tax breaks from the president’s proposal into the final law, but created “sunset” provisions that subject the cuts to expiration in a few years, which keeps the cost of the bill at $330 billion, says Mark Luscombe of CCH Incorpo- rated, the Riverwoods, Illinois, publisher of tax analysis and software for financial professionals. “The Republicans wanted to get the cuts into the law, even if only temporarily, because they hope at some point the cuts will be made permanent,” says Luscombe. By some estimates, the true cost of JGTRRA over the next decade, provided that the tax cuts are made permanent, will be $850 billion to $1 trillion.

The sunset provisions complicate the job of financial advisors and financial planning software companies, not to mention the confusion they’ll create among clients. Money Tree Software was the first of the financial planning software companies to e-mail me saying it had incorporated the new tax law into its software. In what’s become a standard way for professional software companies to handle the sunset planning problem, the Philomath, Oregon, company lets users choose whether a plan they create makes tax cuts expire as per JGTRRA, or assumes that they’ll be made permanent.

For planners, looking at plans based on changing tax laws is wise, because surprises crop up. For instance, despite all the talk about the benefits of a dividend tax cut (taxing dividends at 15% under JGTRRA, instead of at higher ordinary income tax rates) and whether to move dividend stocks into taxable accounts, the effect of the dividend tax cut on long-term financial plans in reality can be minimal.

For example: Money Tree ran a simulation for me to illustrate the long-term effects of the dividend rate cut on a 55-year-old married couple who expect to retire at age 65. We assumed the husband has $150,000 of earned income and the wife $50,000. We gave them 3% raise per year, indexed the tax brackets at 3%, and assumed a 3% inflation rate annually, and expenses of $120,000 now and $95,000 in retirement. Assuming they have $200,000 in CDs earning 4.2% and $350,000 in stocks appreciating 3% annually and throwing off a 2.5% dividend and gains of 5% annually, and that half the cash flow on these investments goes into stocks and the other half goes into their taxable account, the result is counterintuitive: the couple’s pre-JGTRRA plan gave them enough money to live until two months past their 88th birthdays, while the post-JGTRRA plan gives them enough money to pay expenses one year longer. If you assume the JGTRRA cuts are made permanent, the couple would have enough to live on for five months after turning 90.

“Until you run the numbers, it’s hard to know what’s going to happen to a plan,” says Mike Vitkauskas, president of Money Tree. “While the dividend tax cut is a good thing, it’s not going to set the world on fire. For most clients, it will make only a marginal improvement.”

Near-term, incidentally, the effect of the dividend tax cut for this couple is more dramatic, however. Largely because of their sizable dividend income, they’ll see their income tax rate decline about $5,000, according to Vitkauskas.

Vitkauskas also ran a simulation to illustrate whether the dividend tax cut makes it wise to move income-earning investments into taxable accounts, rather than using the traditional strategy of placing them in tax-deferred accounts. For the same 55-year-old couple under all the same conditions but one–their assets in this projection consist of $275,000 in CDs earning 4.2% annually and $275,000 in stocks earning a 2.5% dividend and appreciating 5% annually–he found that it would not seem to matter much whether the assets are held in a taxable or tax-deferred accounts.

In the pre-JGGTRA simulation, holding the $275,000 of dividend stocks in a 401(k) and the CDs in a taxable account would give the couple enough money to last them six months beyond age 86, while swapping the accounts to hold the dividend stocks in a taxable account and the CDs in a tax-deferred account would have given them enough money to last four months past age 86. Not much of a difference.

The post-JGTRRA scenario showed about the same results, Vitkauskas says. Holding the dividends stocks in a 401(k) and the CDs in a taxable account held the couple over for 11 months past age 86, while flipping the accounts took them three months past age 87.

Vitkauskas says it is difficult to draw firm conclusions because the returns, ages, and other factors can influence cases so much. But this data suggests that calls by the consumer press to put dividend assets in taxable accounts post-JGTRRA may be overstating the long-term value of the dividend cut.