President Bush signed
Wednesday, May 28, a $350 billion tax cut package that includes relief
for individuals and small-business owners, helps preserve vital tax credit
programs, and provides federal funds for cash-strapped state governments.
The new law increases the amount small-business owners may deduct immediately,
or "expense," from $25,000 to $100,000, through 2007. The agreement
also increases the temporary bonus depreciation write-off to 50 percent
from 30 percent on equipment purchased after May 5, 2003, and before January
1, 2005. For individuals, the legislation accelerates to this year reductions
in income tax brackets, which also may result in savings for small-business
owners who report their business revenue to the IRS as personal income.
In addition, the AIA worked with other allied organizations to fight back
a Senate-passed provision that would have put an end to the earned-income
exclusion for U.S. taxpayers who work abroad. The House and Senate conferees
dropped the provision before the final vote.
Advocates of the new law also say the money that taxpayers save through
dividend tax relief and individual tax reductions will help pump cash
back into the nation's economy and create a better climate for business
overall.
A little help for state governments
The U.S. House of Representatives and Senate also agreed to include $20
billion in state aid, $10 billion of which is earmarked for Medicaid,
with the rest to be used at the states' discretion. States have been relying
on increases in taxes and fees to pay for Medicaid and other cumbersome
expenses. According to a recent NCSL survey, states are facing a collective
$53.5 billion budget gap for fiscal 2004. The deficits have already led
state legislatures to consider increases in taxes and fees on architecture
and engineering services.
—Tracy F. Ostroff
Copyright 2003 The American Institute of Architects.
All rights reserved. Home Page
|