WASHINGTON — Democrats said Saturday that President Bush's plan to eliminate taxes on corporate dividends would do nothing to help families hurt by the sluggish economy, while adding to the nation's overall debt.
In the weekly Democratic radio address, Rep. Robert T. Matsui of Sacramento said Bush's economic plan would not address the nation's anxiety created by job losses, falling stock prices, ravaged retirement accounts and the specter of war with Iraq.
"What have President Bush and congressional Republicans proposed to do about these problems?" Matsui asked. "The elimination of taxes on corporate dividends."
Matsui, a member of the tax-writing House Ways and Means Committee, cited economists who say the dividend tax cut will not lift the lackluster economy but will increase the debt.
"Who benefits from this tax cut?" Matsui asked. "Well, those earning $1 million or more a year would receive an average tax cut of $27,000 a year. But middle-income families earning $40,000 a year can expect a tax cut of $30 a year."
Bush has proposed accelerating scheduled income tax cuts and eliminating taxes on dividends paid to investors. The administration argues that the $726 billion will boost the stock market and ensure job creation in a growing economy.
The plan is running into trouble, particularly in the Senate where moderate Republicans and Democrats have raised questions about pursuing the tax cuts at the level proposed.
Matsui also criticized the Republican budget proposal the House is expected to take up next week. The plan for fiscal 2004, which begins Oct. 1, calls for deep spending cuts, while making room for $1.4 trillion in tax cuts, including Bush's economic stimulus, over 10 years.
"The Republican budget fails to invest in programs that make a real difference in our communities," Matsui said. "For example, our local firefighters and police officers won't receive the resources they need to prepare for terrorist attacks."
He said the Democratic plan would put money in the pockets of families and boost the economy while helping cash-strapped states avoid massive cutbacks in programs.