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Jobs and Growth Tax Relief Reconciliation Act (2003)

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Jobs and Growth Tax Relief Reconciliation Act (2003)
New York Financial District (Photo: Mario Tama / Getty Images)

What Is JGTRRA?:

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) was enacted when it appeared the Recession of 2001 would just not go away. While the 2001 Bush Tax Cuts focused on personal taxes, JGTRRA focused on investment taxes. Its goal was to stimulate business spending, freeing up funds to increase employment.

Specifically, JGTRRA:

  • Reduced the maximum tax rate on long-term capital gains from 20% to 15%.
  • Reduced the tax rate on qualified dividends from the personal tax rate to a max of 15%.
  • Accelerated many of the provisions in EGTRRA, which were supposed to be phased in more gradually.
  • Increased tax deductions for small businesses.

How Did JGTRRA Affect the Economy?:

Initially, JGTRRA helped the economy out of recession by putting more dollars into the pockets of businesses and investors, and ultimately consumers. It encouraged investment in the stock market by decreasing capital gains and dividend taxes.

However, like EGTRRA, it hurt the economy by decreasing tax revenues.This increased each year’s annual deficit, and thereby the U.S. debt. This debt puts downward pressure on the value of the dollar.

President Bush's tax cuts should have expired in 2004, when the economy was booming. Higher taxes would have slowed spending, helping to prevent the housing boom that led to the Great Recession.

JGTRRA was designed to expire in 2012. However, the Obama Administration and Congress extended it as part of the deal to avoid the Fiscal Cliff. They have no expiration date.  Article updated February 26, 2014

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