Politics

Bush Signs Tax Cut

By CBSNews.com staff CBSNews.com staff

June 7, 2001 / 11:19 AM EDT / CBS

President Bush Thursday signed into law the biggest tax cut in two decades, a sweeping $1.35 trillion bill lowering U.S. income taxes across the board.

The tax reductions, approved by both houses of Congress May 26, will give households a refund of up to $600 this year, reduce most income tax rates by three percentage points starting July 1, 2001, and create a new 10-percent tax bracket.

"Tax relief is now on the way. Today is a great day for America. It is the first major achievement of a new era, an era of steady cooperation," Bush told participants in a White House East Room ceremony.

Bush, joined by first lady Laura Bush, members of his Cabinet and a bipartisan group from the House and Senate — as well as 15 families Bush used to illustrate the need for tax relief — said it was "about time" some of the projected $5.6 trillion budget surplus is returned to taxpayers.

The Check Is In The Mail

When taxpayers should generally expect to receive tax refund checks based on the last two digits of their Social Security numbers, according to the Internal Revenue Service. The IRS says taxpayers need only wait for the mail and need not take any other action. For married couples filing jointly, the first Social Security number on the return will be used.

00-09: Week of July 23
10-19: Week of July 30
20-29: Week of Aug. 6
30-39: Week of Aug. 13
40-49: Week of Aug. 20
50-59: Week of Aug. 27
60-69: Week of Sept. 3
70-79: Week of Sept. 10
80-89: Week of Sept. 17
90-99: Week of Sept. 24

Source: AP

While the bill got significant Democratic support, most Democrats criticized it as far too large to meet other national priorities, such as increased spending on education and a Medicare prescription drug benefit, and said it would cost at least $4 trillion in the second decade. They contend it remains unfairly tilted toward the wealthy, even though several provisions were added by Senate moderates to benefit lower-income people.

Democrats now control the Senate, due to Vermont Sen. James Jeffords' switch from the GOP to independent. New Senate Majority Leader Tom Daschle of South Dakota said there would be no immediate effort to undo the tax cut but predicted changes in coming years — particularly since most provisions expire on Dec. 31, 2010, under Senate budget rules.

"We don't have the votes to revisit it today wth any success," Daschle said Wednesday. "I just know that at some point, that reality is going to come crashing down on all of us, and we're going to have to deal with it."

House Republican leaders said they will attempt to pass legislation this year to eliminate the "sunset" expiration date and make the tax cuts permanent. The Democratic majority in the Senate, however, could make it difficult for that measure or any other House GOP tax cuts to pass this year.

"This debate is over," said Mike Siegel, spokesman for Sen. Max Baucus, D-Mont., new chairman of the Senate Finance Committee. "We passed a strong bipartisan bill through months of negotiation. It's important that we turn our attention to other critical priorities."

Yet Republicans promised to press ahead with more tax relief, possibly including cuts in capital-gains taxes, energy tax breaks, a package of cuts for small business to accompany an increase in the minimum wage and extension of several provisions that expire this year.

"This tax bill is the beginning, not the end," said House Majority Leader Dick Armey, R-Texas.

One other looming problem is the alternative minimum tax, which will limit the tax cut's benefits for millions of people in the coming years. Because it was never indexed for inflation, more taxpayers find themselves snared by the tax as their incomes rise. Official estimates say the tax, which affected just 1.4 million taxpayers this year, will hit 35.5 million in 2010.