The economy and Tax Relief Extension Act
Published 7:14 pm Tuesday, December 13, 2005
By By Jo Bonner
As 2005 draws to a close, Americans can take pride in the fact that the economic policies currently in place are working. Our economy is thriving even in the face of two years of devastating natural disasters and funding a global war on terror.
America has shown resilience and a dedication to rebuild what we have lost. We now have an atmosphere where small business owners have taken risks, invested in capital improvements and created jobs.
As a result, consumer confidence is up dramatically. It is up nearly 14 points from October to November, and for 10 straight quarters, the national gross domestic product (GDP) has exceeded three percent, with the GDP growing at 4.3 percent in the third quarter.
The national unemployment rate is lower than the average of the last four decades. In the month of November, 215,000 jobs were created, and the unemployment rate remained unchanged at 5.0 percent.
In Alabama the unemployment rate was 4.5 percent for the month of October. This marks the ninth consecutive month that Alabama's unemployment figure has been below the national rate.
Over the past year, Alabama had a net gain of 20,300 jobs. The majority of these jobs occurred in professional and business services followed by trade, transportation, and utilities services.
Whether it is job growth or new home sales, there is ample evidence we are on the right track and must continue on the policy path that has fostered this tremendous economic growth.
President Bush has called on Congress to keep the economic momentum going by making tax relief permanent and working against efforts to increase taxes. Current tax relief provisions have led to a 15 percent increase in federal revenue over the past year while budget deficit estimates have been reduced by approximately $100 billion.
Unfortunately, many continue to fight against the policies that led to the economic recovery and for increased taxes and spending.
Congress has not only passed the policies leading to economic recovery, but we have been pushing a competitive economic agenda designed to help create and maintain high paying, high quality American jobs.
The House of Representatives has passed more than 50 pieces of legislation over the past two years focused on helping American workers compete in a new economy.
In an effort to continue our nation's impressive display of economic growth, Congress last week passed the Tax Relief Extension Reconciliation Act of 2005.
I am pleased to have supported this important legislation that will benefit virtually every working American and continue to steer our economy on the path of continued growth.
The key provisions in this legislation include extending the reduced tax rates on capital gains and dividend income through 2010. According to the Joint Committee on Taxation, over 60 percent of Americans receiving capital gains or dividend income have incomes of $100,000 or less and stand to benefit from the passage of this bill.
A strong, vibrant economy will continue to help us reduce the federal deficit. As we continue to add to the more than 4.4 million jobs created since May 2003, we will see higher production, increased income, and higher consumer spending, which all help grow the economy.
Retailers must be pleased going into the Christmas shopping season with news that retail sales, excluding car sales, increased nearly 22 percent over last year. While shoppers spent $27.8 billion over the post-Thanksgiving weekend, reports indicated a 13 percent increase in new home sales in October and continued expansion in manufacturing production.
Gulf Opportunity Zone Act
The House last week also passed the Gulf Opportunity Zone Act, creating $7.1 billion in tax subsidies over five years to help the Gulf Coast rebuild from Hurricane Katrina.
The legislation, which passed by an overwhelming 415-4 vote, provides a variety of tax incentives that are aimed at encouraging businesses to rebuild or relocate to the "Gulf Opportunity Zone" (the Zone).
The Zone is comprised of the counties and parishes in Louisiana, Mississippi, and Alabama that were designated as warranting individual or public and individual assistance by reason of Hurricane Katrina.
The bill increases incentives to rebuild housing in the Zone by expanding the allocation and size of the low-income housing tax credit. It also increases the Rehabilitation Tax Credit to help restore commercial building.
The bill also doubles to $20,000 the deduction for reforesting for small timber owners, those owning less than 500 acres. It also reduces their tax burden by spreading this year's losses against previous tax filings.
Most of the bill's key provisions are similar to the Senate version; however, differences in the two versions will have to be worked out before the final bill is sent to the president for his signature.
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Jo Bonner is a U.S. congressman. His column appears weekly.