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American Morning
President Bush Signs Tax Cut Bill into Law Today
Aired May 28, 2003 - 07:19 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.
HEIDI COLLINS, CNN ANCHOR: President Bush today will sign the tax cut into law. He says the $330 billion package will create jobs, but Democrats say it's tilted toward the rich and will only increase the deficit.
Let's turn to our financial correspondent, Gerri Willis, for more on this, her take on what it will mean for taxpayers.
Tell us, in fact, how will this tax cut affect everybody?
GERRI WILLIS, CNN FINANCIAL CORRESPONDENT: Well, there's a little something for everybody in this tax cut. And to understand the specifics of the tax cut, it's probably best to look at individual scenarios.
Let's start with a single taxpayer earning $50,000. He's going to have savings of $326 under the terms of this plan. That's about a little less than 1 percent of his adjusted gross income, and he's benefiting from the reduction of these marginal tax rates, which is the very big deal in this plan, but not getting a huge boost here. You can see the numbers.
And then let's look now at a retiree over the age of 65, somebody who is earning 30,000, including $3,000 in dividend income. This savings here of $350, it's a little over 1 percent in terms of the annual gross income.
But keep in mind here that dividend income is being taxed at a different rate. Those taxes are going down now to 15 and 5 percent from your marginal tax rate level. So, that's a big benefit for people with dividend income tax. If you're an investor, you really benefit from this plan.
Finally, the big beneficiaries, the people getting the big bonanza are people with kids. We were talking about this before, right?
COLLINS: Yes, you said have more kids.
WILLIS: Have more kids, it's a way to get your taxes reduced, maybe not this year, but in subsequent years. If you're making $100,000, this example right here, including $5,000 in capital gains, you've got two kids under the age of 17 -- and let me just mention this particular example includes $15,000 in itemized deductions -- your savings is almost $2,500 for the year. And that's 2.49 percent of your annual gross income. What's going on here are the difference in marginal tax rates that we described before. Capital gains going down again from 20 percent to 15, and the child tax credit, which is such a big deal in this package, also benefiting. So, you can see, everybody gets a little something.
COLLINS: Well, is there anybody who is not affected by all of this?
WILLIS: Well, the income tax changes actually go to people who are in the top four brackets, and if you're in the lower brackets the changes are less impressive, but you do get a little benefit because they're expanding the 10 percent bracket.
COLLINS: All right, so, we're not going to see a check this time around though, are we?
WILLIS: Well, you might if you have kids, like Leon does, you're going to get a big check. But if you don't have children, this isn't an income tax refund that you're getting, it's the child tax credit that's at work here, and you're going to get essentially $400 per kid. That tax credit going from 600 to 1,000.
COLLINS: OK, have more kids, everybody.
WILLIS: I didn't say that.
LEON HARRIS, CNN ANCHOR: I don't know about that.
COLLINS: Gerri Willis, thanks so much for breaking that down for us. Appreciate it.
WILLIS: You're welcome.
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 28, 2003 - 07:19 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: President Bush today will sign the tax cut into law. He says the $330 billion package will create jobs, but Democrats say it's tilted toward the rich and will only increase the deficit.
Let's turn to our financial correspondent, Gerri Willis, for more on this, her take on what it will mean for taxpayers.
Tell us, in fact, how will this tax cut affect everybody?
GERRI WILLIS, CNN FINANCIAL CORRESPONDENT: Well, there's a little something for everybody in this tax cut. And to understand the specifics of the tax cut, it's probably best to look at individual scenarios.
Let's start with a single taxpayer earning $50,000. He's going to have savings of $326 under the terms of this plan. That's about a little less than 1 percent of his adjusted gross income, and he's benefiting from the reduction of these marginal tax rates, which is the very big deal in this plan, but not getting a huge boost here. You can see the numbers.
And then let's look now at a retiree over the age of 65, somebody who is earning 30,000, including $3,000 in dividend income. This savings here of $350, it's a little over 1 percent in terms of the annual gross income.
But keep in mind here that dividend income is being taxed at a different rate. Those taxes are going down now to 15 and 5 percent from your marginal tax rate level. So, that's a big benefit for people with dividend income tax. If you're an investor, you really benefit from this plan.
Finally, the big beneficiaries, the people getting the big bonanza are people with kids. We were talking about this before, right?
COLLINS: Yes, you said have more kids.
WILLIS: Have more kids, it's a way to get your taxes reduced, maybe not this year, but in subsequent years. If you're making $100,000, this example right here, including $5,000 in capital gains, you've got two kids under the age of 17 -- and let me just mention this particular example includes $15,000 in itemized deductions -- your savings is almost $2,500 for the year. And that's 2.49 percent of your annual gross income. What's going on here are the difference in marginal tax rates that we described before. Capital gains going down again from 20 percent to 15, and the child tax credit, which is such a big deal in this package, also benefiting. So, you can see, everybody gets a little something.
COLLINS: Well, is there anybody who is not affected by all of this?
WILLIS: Well, the income tax changes actually go to people who are in the top four brackets, and if you're in the lower brackets the changes are less impressive, but you do get a little benefit because they're expanding the 10 percent bracket.
COLLINS: All right, so, we're not going to see a check this time around though, are we?
WILLIS: Well, you might if you have kids, like Leon does, you're going to get a big check. But if you don't have children, this isn't an income tax refund that you're getting, it's the child tax credit that's at work here, and you're going to get essentially $400 per kid. That tax credit going from 600 to 1,000.
COLLINS: OK, have more kids, everybody.
WILLIS: I didn't say that.
LEON HARRIS, CNN ANCHOR: I don't know about that.
COLLINS: Gerri Willis, thanks so much for breaking that down for us. Appreciate it.
WILLIS: You're welcome.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
