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Economic Recovery Tax Relief Act: Amending the IRS Code for Permanent Tax Incentives

It's no secret that many Americans are facing serious financial difficulties today. In recent reports, congress considered instituting public projects and programs that would cost trillions of U.S. dollars, with a questionable outcome for performance, and yet would not provide any long term benefit to our country's economic growth. However, there are very plausible solutions, and one of the most effective solutions is through tax relief. To encourage individual and small business spending is to provide a tax relief package aimed at the American family and business. Reducing the tax burden to the American public and the institution alike, will support long term economic growth and prosperity.

The Economic Recovery and Middle-Class Tax Relief Act of 2009 would permanently supplant the reductions in the capital gains and dividend tax enacted by the 2003 Tax Relief Reconciliation Act.

Some of the key points of H.R. 470 are:

For Individuals and Families:

Provide every income tax bracket with a rate cut of 5 percent
Increase the child tax credit from $1,000 to $5,000
Repeal the hated Alternative Minimum Tax
Make the lower capital gains/dividends tax rate of 15 percent permanent
Repeal mandatory distribution rules for retirement accounts
Increase tax deductions for student loans and education expenses
Make all withdrawals from retirement accounts tax- and penalty-free during 2009

For Businesses and Entrepreneurs:

Align the corporate tax rate with international competitors by cutting it from 35 percent to 25 percent
Allow immediate expensing for business purchases
Index the cost basis for capital gains to inflation
Extend the 15 percent capital gains tax rate to corporations
Make permanent the tax credit for research and development
Extend the carry back period for net operating losses to seven years.

What's unique about the Economic Recovery and Middle-Class Tax Relief Act is that no additional spending is needed, and would apply also to a one percent reduction for FY 2009 discretionary spending.

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