President Bush signed May 17 the $70 billion tax cut package that the House and Senate passed last month that extends through 2010 a 15% tax rate on capital gains and dividends, and provides alternative minimum tax (AMT) relief to nearly 15 million middle-income taxpayers through 2006.
Meanwhile, Senate Majority Leader Bill Frist (R-Tenn.) said the Senate would take up in May the debate on repealing the death tax. However, Mary Bell, government relations manager for the Financial Planning
Association, says that since it’s mid-May and no discussion has started, it will
likely be sometime in June that Congress takes up the debate.
The tax cut legislation also includes a provision that would allow U.S. financial services companies to better compete for global business, as well as a provision that allows individuals, regardless of their income, to convert their traditional IRA to a Roth IRA come 2010.
Democrats have criticized the legislation as favoring the rich, but Mark Lackritz, president of the Securities Industry Association (SIA) hails the legislation as good news for economic growth, the economy, investors, and the securities industry. When the tax rates on capital gains and dividends were first cut in 2003, Lackritz told reporters on a recent conference call, the economy was stagnant, and growth was a little over 1% per year. Following passage of the tax cuts in 2003, economic growth picked up in the first quarter of 2003 to 8.4%, and since then it’s averaged around 4%, he said. Since 2003, the country has added 5.4 million new jobs, and the unemployment rate has fallen to 4.7%, he said.