President Bush on Wednesday signed a bill that will extend tax cuts on capital gains and dividends through the end of 2010, saying the extensions will help sustain the booming economy.
“At all levels of income, the tax cuts on dividends and capital gains are letting Americans keep more of their own money and live a better life,” Bush said.
But even before Bush signed the legislation in a South Lawn ceremony, Democratic leaders said it amounted to “massive handouts to big business and multimillionaires.”
“America can do better,” Senate Minority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., said in a statement. “With the cost of middle-class life rising across America, Democrats believe tax cuts should be aimed at the people who need them most.”
Bush said the expanding economy has vindicated Republican tax cuts.
“Our pro-growth policies stand in stark contrast to those in Washington who believe you grow your economy by raising taxes and centralizing power,” he said. “They are wrong.”
Senate Majority Leader Bill Frist, R-Tenn., said the tax cut extensions would benefit “working taxpayers” by averting a massive tax hike that would have otherwise kicked in at the end of 2008.
“President Bush and the Republican Congress have prevented a $70 billion tax increase on the American people,” he said.
Bush first cut taxes on capital gains and dividends three years ago. During the next 31 months, the cuts had a profound impact on the economy, according to White House political strategist Karl Rove.
“The 500 leading U.S. companies on the S&P 500 have increased their dividend payments 725 times, and quarterly dividend payments averaged almost $47 billion a quarter,” he said in a speech this week.
“That is a 51 percent increase compared to the quarterly average for the 10 years previous to the tax cut,” he said. “That?s money that is going into retirement funds and IRAs and people?s pocketbooks.”
