Jobs and Growth Tax Relief Reconcilliation Act of 2003

From dKosopedia

Categories: Legislation | Taxes

This act lowered the 38.6% tax bracket to 35%, the 35% tax bracket to 33%, the 30% tax bracket to 28% and the 27% tax bracket to 25% (these brackets were 39.6%, 36%, 31% and 28% respectively during the Clinton years). It ended the "marriage penalty" in the 15% tax bracket, increased the amount of income subject to the 10% bracket, and increased the per child tax credit from $600 to $1000 producing tax credit advance checks. This legislation mostly speeded up the effective dates of proposals in early tax legislation, and the lower income provisions of this legislation were extended in the Working Families Tax Relief Act of 2004.

This act also transformed the taxation of capital gains and dividends. Most corporate dividends, which were previously taxed as ordinary income at normal tax rates, are now taxed at the favorable capital gains tax rates. Corresponding reductions were made in the personal holding company tax which taxes the undistributed income of shell corporations with mostly passive income.

The capital gains of higher income taxpayers were previously taxed at 18% or 20% rates and now are taxed at 15% rates. The capital gains of lower income taxpayers were previously taxed at 10% or 8% rates and now are taxed at a 5% rate (0% in 2008). The distinction between long term and five year capital gains was eliminated.

Summary