What Is JGTRRA?: The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) reduced tax rates on long-term
capital gains and dividends to 15%. It also accelerated many of the provisions in EGTRRA, which
were supposed to be phased in more gradually. Finally, it increased tax deductions for small
businesses.
How Does JGTRRA Affect the Economy?: Initally, JGTRRA helped the economy out of recession by putting more dollars into the pockets of
consumers, small businesses and investors. It also encouraged investment in the stock market by
decreasing capital gains and dividend taxes.
However, like EGTRRA, it will probably hurt the economy by decreasing tax revenues. This will increase the budget deficit and the national debt. It is also subject to the “sunset” provision, which will probably never be enacted. This means that tax revenue declines will continue just when they are needed most to fund Social Security and Baby Boomer retirements.
