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How Will Tax Cuts Affect Your Bottom Line?
Aired May 22, 2003 - 13:26 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: A $350 billion package of tax cuts is expected to clear Congress this week, and President Bush says he'll sign it. House and Senate negotiators hashed out a deal with the vice president yesterday, and it's not all the president asked for, but he is calling it a victory.
So, what will it mean for you, for me, for all of us?
Here to help us add the numbers, CNN congressional correspondent Kate Snow.
Hi, Kate.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Hi, Kyra.
Well, you know, for months we've heard President Bush talk about the double taxation of dividends, end the double taxation. He's said that in a lot of speeches. Well, what does that really mean? This bill would do that. It would reduce the taxation on dividends. In fact, for most people it would drop it down to 15 percent.
And not everyone earns dividends, of course. In fact, a lot of companies don't even give out dividends anymore. They've kind of gone out of style. But about a quarter of Americans reported some dividend income on their 2000 taxes, so they would probably be eligible. Of those -- of that one quarter, most of them are wealthier Americans. About 60 percent of them make over $100,000 per year.
But this bill also contains some help for every single American taxpayer, anyone who pays taxes at all.
Let's start out with families. First, let's start out with families -- 25 million families would get a break in the form of a check this summer. This is going to be a big deal for a lot of families. We're talking about families who make under $130,000 a year. They're going to get an increase in the child tax credit for this year's taxes. It will go from the current $600 per child up to $1,000 per child. So, if you do the math, that's a $400 check coming from Uncle Sam to most of those 25 million families. Those checks would go out this summer.
Now, because of the changes that are made to all of the tax brackets, this income tax bracket, they are also going to be changes for every American, even if you don't have children. Everyone is going to see less money taken out of their paycheck. That will hit around July. Less money withheld based on new tables that they'll send out to all of our employers. Again, that's because of the changes made to the individual income tax brackets.
There are also specific changes in this bill for married people to try to get rid of what they call the marriage penalty. The standard deduction for someone who is married would go up this year to $9,500, and more of married people's income would get taxed at 15 percent instead of at higher rates.
And then finally, some tax breaks for businesses, Kyra. We're talking about mainly some focus on small businesses, although it would affect other businesses as well. The break would allow more small businesses to qualify for certain breaks when they buy new equipment for their business. Making the break that they get, the amount of money that they can count off on their taxes, write off on their taxes would be even larger than it is now. They would be able to expense $100,000 worth of equipment for these small businesses.
So, Kyra, a lot contained in this tax package. Of course, the president already trumpeting it. It's going to pass the House -- likely to pass the House late tonight, maybe even early tomorrow morning. And the Senate takes it from there. They are expected to vote on it tomorrow -- Kyra.
PHILLIPS: All right. So, when can we see the IRS taking less money out of our paychecks? How soon could it be, Kate?
SNOW: July. July is what they're telling us. If everything goes as planned, if the House passes it tonight, the Senate passes it tomorrow, expect the president to act on this very quickly, because, of course, he'll want to get this signed into law. They say that the IRS can then send out these new tables to all of the employers around the country. And, of course, it's based on however much money you earn and based on how many deductions you take when you sign up for your taxes. They would then readjust your paycheck, readjust it and take a little bit less out to go to Uncle Sam -- Kyra.
PHILLIPS: All right, not bad news. Kate Snow on the Hill -- thanks, Kate.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired May 22, 2003 - 13:26 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: A $350 billion package of tax cuts is expected to clear Congress this week, and President Bush says he'll sign it. House and Senate negotiators hashed out a deal with the vice president yesterday, and it's not all the president asked for, but he is calling it a victory.
So, what will it mean for you, for me, for all of us?
Here to help us add the numbers, CNN congressional correspondent Kate Snow.
Hi, Kate.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Hi, Kyra.
Well, you know, for months we've heard President Bush talk about the double taxation of dividends, end the double taxation. He's said that in a lot of speeches. Well, what does that really mean? This bill would do that. It would reduce the taxation on dividends. In fact, for most people it would drop it down to 15 percent.
And not everyone earns dividends, of course. In fact, a lot of companies don't even give out dividends anymore. They've kind of gone out of style. But about a quarter of Americans reported some dividend income on their 2000 taxes, so they would probably be eligible. Of those -- of that one quarter, most of them are wealthier Americans. About 60 percent of them make over $100,000 per year.
But this bill also contains some help for every single American taxpayer, anyone who pays taxes at all.
Let's start out with families. First, let's start out with families -- 25 million families would get a break in the form of a check this summer. This is going to be a big deal for a lot of families. We're talking about families who make under $130,000 a year. They're going to get an increase in the child tax credit for this year's taxes. It will go from the current $600 per child up to $1,000 per child. So, if you do the math, that's a $400 check coming from Uncle Sam to most of those 25 million families. Those checks would go out this summer.
Now, because of the changes that are made to all of the tax brackets, this income tax bracket, they are also going to be changes for every American, even if you don't have children. Everyone is going to see less money taken out of their paycheck. That will hit around July. Less money withheld based on new tables that they'll send out to all of our employers. Again, that's because of the changes made to the individual income tax brackets.
There are also specific changes in this bill for married people to try to get rid of what they call the marriage penalty. The standard deduction for someone who is married would go up this year to $9,500, and more of married people's income would get taxed at 15 percent instead of at higher rates.
And then finally, some tax breaks for businesses, Kyra. We're talking about mainly some focus on small businesses, although it would affect other businesses as well. The break would allow more small businesses to qualify for certain breaks when they buy new equipment for their business. Making the break that they get, the amount of money that they can count off on their taxes, write off on their taxes would be even larger than it is now. They would be able to expense $100,000 worth of equipment for these small businesses.
So, Kyra, a lot contained in this tax package. Of course, the president already trumpeting it. It's going to pass the House -- likely to pass the House late tonight, maybe even early tomorrow morning. And the Senate takes it from there. They are expected to vote on it tomorrow -- Kyra.
PHILLIPS: All right. So, when can we see the IRS taking less money out of our paychecks? How soon could it be, Kate?
SNOW: July. July is what they're telling us. If everything goes as planned, if the House passes it tonight, the Senate passes it tomorrow, expect the president to act on this very quickly, because, of course, he'll want to get this signed into law. They say that the IRS can then send out these new tables to all of the employers around the country. And, of course, it's based on however much money you earn and based on how many deductions you take when you sign up for your taxes. They would then readjust your paycheck, readjust it and take a little bit less out to go to Uncle Sam -- Kyra.
PHILLIPS: All right, not bad news. Kate Snow on the Hill -- thanks, Kate.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
