People who liked this year's passage of tax breaks should be even happier next year when Congress tries to pass another round of tax relief, U.S. Rep. Charlie Norwood, D-10, said Monday.
The Augusta area Republican returned to his Kiwanis Club to report on the pair of bills enacted this month that contained dozens of tax changes and a balanced budget in the year 2002. He said this year's bill just dabbled around the edges compared to the wholesale tax changes next year's bill would contain, he said.
This year's federal tax bill lowered the tax on capital gains, raised the appreciation allowance, expanded the deductibility of health insurance for self-employed taxpayers and created tax credits and new savings accounts for education and health care. It also allowed bigger farms and businesses to escape inheritance taxes.
Dr. Norwood said those provisions would boost the economy toward his target annual growth rate of 3 percent to 4 percent. The current growth rate, though below his goal, brought unexpected tax revenue, helping Congress balance the budget in five years.
"I wish we had taken that windfall and applied it to the deficit this year. Think how good that would have sounded if I could have said today that we had balanced the budget this year," he said.
Next year's Republican tax bill will lower capital gains further and let individual taxpayers leave tax-free estates up to $1 million, he said. He hopes it also cuts Social Security payroll taxes even if it reduces benefits for wealthy retirees.
After the speech, the 1997 tax bill seemed to play well with people on the sidewalk in downtown Augusta.
Sharon Jones of Augusta said she would pay off bills with the $500 tax credit she'll get for her 2-year-old son.
Davette Alston, a one-month resident of Augusta, said the tax credits should help her family, especially the $500-per-child tax credit for her children ages 7, 4, and 7 months. "It will definitely go into their college fund," she said.
The Alstons can put college savings into a new account that will allow the money to grow tax free, as a result of the new legislation.
The fact that the balanced budget legislation didn't contain any tax increases that will affect Helen Capps of North Augusta pleased her. "It sounds good. I don't see why it won't do some good," she said.
Dr. Norwood paused in his discussion of federal tax reductions for a moment to lobby club members for a state-tax increase. He urged them to support a 7-cent increase in the state gas tax to go toward road building.
Visiting out-of-state gas drivers would contribute to paying the tax, he said. Augusta would benefit because state highways to Savannah and Macon could be completed ahead of their present schedule, he predicted.
"We've got to get to the port of Savannah. That is going to favorably affect this trading area," he said.