President Bush’s tax plan. So says Thomas Boston, professor of economics at the Georgia Institute of Technology and a member of the BE Board of Economists. “The current legislation allows small businesses to increase the amount of expensing they do for tax purposes, but they need more assistance in terms of being able to offer health packages to employees.”
Boston also contends that the plan does not offer measures to stimulate the economy. He says the legislation is skewed toward assisting individuals in the upper-income bracket, a group that tends to save rather than spend. And spending is what stimulates the economy to grow.
Highlights of the Jobs and Growth Tax Relief Reconciliation Act of 2003
Business Provisions
Through 2005, small businesses can immediately expense $100,000 per year in new equipment. The usual limit under Section 179 was $25,000. Small business eligibility has also been expanded. Companies qualify if their annual capital investment is less than $400,000. The cap was previously $300,000.
Through 2004, a bonus depreciation clause applies to all companies whose capital purchases exceed $100,000. Instead of the usual 30%, they can now write-off 50% of new equipment placed in service during the year.
Individual Provisions (for those in the higher tax brackets)
| 38.6% | cut to 35% |
| 35% | cut to 33% |
| 33% | cut to 28% |
| 27% | cut to 25% |
SOURCE: U.S. DEPARTMENT OF THE TREASURY