May 24, 2003
Saturday - 12:30 am

Washington, DC - U.S. Sen. Lisa Murkowski welcomed final passage of President George Bush's major economic stimulus bill on Friday saying it will help both the nation's and Alaska's economy.

Murkowski, who voted for the $350 billion stimulus package (the Jobs and Economic Growth Reconciliation Act, H.R. 2), which contained the third largest tax cut in the nation's history, said the bill will stimulate the economy, produce jobs and help Americans decide how to spend their own hard-earned money.

"This measure provides broad tax relief to individuals, families and small businesses. It will put more money in consumer pockets quickly and especially help families with children through the immediate expansion of the child tax credit and through the elimination of the marriage penalty. It will put people back to work, as it should create approximately 1 million new jobs over the next 18 months. It really is a good measure and one that we can afford," said Murkowski.

According to a news release the bill specifically:

• Accelerates income tax rate cuts from the current 15%, 28%, 31%, 36%, 39.6% rates down to a new expanded 10% bracket and to 25%, 28%, 33% and 35% by 2006. Lower federal tax withholding rates are likely to go into effect this summer.
• Increases the child tax credit to $1,000 from $600 immediately.
• Eliminates the "marriage penalty," where a couple filing a joint tax return has been paying more than individuals, if they filed separately.
• Reduces taxes on capital gains and dividends to 15% (5% for the two lowest tax brackets) through 2008. The bill also eliminates taxes for the two lowest tax brackets in 2009, but all cuts go away in 2010 - when the economy should be fully recovered - unless extended.
• For small businesses the package increases the small-business deduction limit for equipment purchases to $100,000 and raises the depreciation amount for business equipment to 50% from 30%, at least through 2005.
• And the bill will provide states with a $10 billion increase in Medicaid assistance for health care for the poor and $10 billion to state and local government grants over the next two years.

Murkowski said that in Alaska 59,000 families should benefit from the child tax credit expansion, 86,000 married couples from the end of the marriage penalty, 64,000 small business entrepreneurs from the business changes and 67,000 Alaskans should gain from the changes in dividends and capital gains. Overall, more than 220,000 Alaska tax filers should gain some benefit from the bill with Alaskans gaining about $300 million more in disposable income a year from the bill, at least through though 2008. The Heritage Foundation also has estimated the bill should generate about 2,000 new jobs in the state.

According to final estimates, a married couple with one child and income of $40,000 should see their taxes decline by $732 (from $2,235 to $1,503 in 2003) - a 33 percent decline. A married couple with two children and income of $40,000 would see their taxes decline by $1,133 (from $1,178 to $45) - a decline of 96 percent. Also a married couple with two children and an income of $60,000 should see their taxes decline by $900 (from $3,750 to $2,850) in 2003, a decline of 24 percent.

Alaska Provision:

Murkowski noted that conferees modified a Senate provision that she co-sponsored governing the allocation of the $20 billion of new aid to states.

According to information provided in the news release, under the final formula Alaska actually gained $8 million more in aid than in the original Senate proposal over the next two years. The state will gain $84.11 million in extra federal aid, $34.11 million for Medicaid, specifically raising the Federal Medical Assistance Percentage (FMAP) to pay for health care for the poor. The state also will get $50 million in "flexible" assistance to be used for health-related expenses.

"This extra aid should be especially helpful to Alaska as it deals with its fiscal gap. This $84 million is on top of the extra $40 million Alaska is already guaranteed in Medicaid funding for next year. It really should make a difference in providing health care to the state's lower-income citizens," said Murkowski.

The major tax legislation, which passed the Senate 50-50 with the Vice President breaking the tie, now heads to President Bush for his signature.

Source of News Release:

Office of Senator Murkowski
Web Site

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