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Sunday, April 09, 2006

Tax Cuts and Job Growth

Rea S. Hederman Jr. and James Sherk, policy analysts for The Heritage Foundation , took advantage of this week's Department of Labor report on job growth to point out the importance of Congress making the 2003 tax cuts permanent.

The report, released Friday, shows that the unemployment rate is now 4.7%. The number of new jobs created in March is 211,000, pushing the total number of new jobs created over the last year to 2.1 million. Since the June 2003 tax cuts were enacted, the unemployment rate has fallen from 6.3%, and the economy has added over 5 million new jobs.

Hederman and Sherk had this to say about the relationship of the current job growth to the 1993 tax cuts.

This is no coincidence; the 2003 tax cuts reduced the cost of business expansion, fueling economic growth and job creation.

Lower tax rates on capital gains and dividends reduced the cost of capital and spurred business investment during the last three years. Reducing the tax code’s bias against income that is saved and invested has helped to fuel the current economic expansion.

However, as Hederman and Sherk remind us, unless Congress acts, these tax cuts will expire in 2008. The American people need to remind Congress that they work for us and that these tax cuts need to become permanent.


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