The bill is expected to be on Bush's desk by Monday -- the Memorial Day holiday -- and refund checks for some taxpayers could be sent out by late summer, according to Senate aides.
"This bill I'm going to sign is good for American workers, it is good for American families, it is good for American investors and its good for American entrepreneurs and small business owners," Bush said on Capitol Hill after a meeting with Congressional leaders.
The bill would accelerate tax cuts called for in the $1.3 trillion 2001 measure, increase child credits from $600 to $1,000, eliminate the marriage penalty and expand the 10 percent tax bracket. All these provisions would expire in 2005.
"This package will help ease economic anxiety," Senate Finance Committee Chairman Charles Grassley, R-Iowa, said in a written statement. "It'll pump up our consumer-driven economy. It'll put more money in individuals' and families' pockets."
Not everyone was as enthusiastic as Senator Grassley. In typical fashion, Se. Tom Daschle, "Dr. No" himself, had this to say:
"This bill misses a real opportunity to get the economy back on track and help Americans who are struggling ... Instead, it gives away billions to those who need it least and does very little for those who need it most."
The current version lowers capital gains and dividend taxes to either 15 percent or 5 percent depending on the income of the taxpayer and would have an overall tax reduction effect of $350 billion. The deal also includes $33 billion in new spending, brining the package size to $383 billion.
One of the GOP Senators who was against the President's original version of the tax cut, Sen. George Voinovich, was happy the GOP compromised, and told the AP: "If they stay within the 350, I'm fine. I appreciate the fact that they've been trying to honor my concerns and make me an honest man."
The original Senate package passed in a tie vote, broken by the vice president, and several key centrists, including Republican Sen. George Voinovich of Ohio and Democrats Ben Nelson of Nebraska and Evan Bayh of Indiana, expressed initial reservation about voting for a package larger than $350 billion.
According to Senate Finance Committee aides, the paycheck withholding levels could be adjusted by July and taxpayers would see an increase in their take-home pay. About 26 million taxpayers could see a refund on child credits of $400 by the end of summer.
The most contentious measure was Bush's plan to permanently discontinue taxing corporate dividends. The compromise bill will reduce taxes on dividends and capital gains 15 percent, 5 percent on the lowest tow tax brackets which expires in 2009.
In 2009, the taxes on corporate dividends would be permanently ended for the lowest two tax brackets.
The bill would give $20 billion to aid states many of which are strapped for resources as tax revenues faltered in the bad economy.
The bill increases the small business deduction limit for equipment purchases to $100,000 to encourage entrepreneurs and raise the amount firms can depreciate equipment from 30 percent to 50 percent of its value.
The plan reduces wage by accelerating previously planned cuts on income tax rates. It cuts taxes for married couples and gives parents a $1,000 per child tax credit until 2005.
The plan also pushes business investment by allowing small businesses to write off up to $100,000 of equipment investments through 2004, and allows them to depreciate more of their assets through 2004.
Bush had originally proposed a tax cut of more than $725 billion, which the House approved in a partisan vote, but the more closely divided Senate reduced the proposal by more than 50 percent.
Copyright 2003 by United Press International.
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