The Bush plan: What it means to you .
Here's how the president's economic stimulus package may affect you.January 8, 2003: 1:12 PM EST .
NEW YORK (CNN/Money) - As expected, President Bush on Tuesday proposed an accelerated reduction of income tax rates and the elimination of taxes on dividends for individual investors. His proposals were the centerpiece of an economic stimulus plan that the White House estimates will cost $674 billion over 10 years. According to estimates by the Tax Foundation, the average U.S. family of four making $66,619 might save $1,133 if four of Bush's proposals are implemented, not including the elimination of dividend taxes. (To see how much you might save depending on where you live, click here.) The White House, meanwhile, estimates that the president's proposals will save taxpayers an average of $1,083 on their 2003 taxes, while a family of four with two wage earners making $39,000 would save $1,100. How much of those savings taxpayers would keep, however, is another question. Many states have been facing fiscal problems and are planning spending cuts and tax increases. "There's no question that a significant fraction of savings.are going to be gobbled up by hungry state and local governments," said Bill Ahern, spokesman for the Tax Foundation. Following is a list of the changes Bush proposed that would affect individual taxpayers and the federal tax savings you may see as if they're enacted. (To read about the Democrats' rival stimulus plan, click here.) Accelerating income tax rate cutsAs it stands now under the Tax Relief Act of 2001, income tax rates are scheduled to come down in 2004 and again in 2006. But instead of waiting those extra years, Bush said he will ask Congress to make those cuts effective for this tax year, retroactive to Jan. 1. (See table.) Back to the futureBelow are the scheduled tax rate reductions set in the Tax Relief Act of 2001. President Bush on Tuesday proposed accelerating those reductions to 2006 levels.
