What is the 'Jobs And Growth Tax Relief Reconciliation Act of 2003 - JGTRRA'

The Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) was a U.S. tax law Congress passed on May 23, 2003, which lowered the maximum individual income tax rate on corporate dividends to 15%.

The JGTRRA was put forward as part of an effort to jump-start the U.S. economy following the attacks of 9-11 and the 2001 recession. By reducing the amount of tax investors paid on dividends and capital gains, public companies were encouraged to pay dividends instead of holding onto their cash, thereby stimulating the overall economy.

Breaking Down 'Jobs And Growth Tax Relief Reconciliation Act of 2003 - JGTRRA'

Following the recession of 2001 and the 9-11 attacks, the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) was passed into law and did achieve its goal of spurring the U.S. economy. The law reduced the long-terms capital gains rate to 15% from 20%. More controversially, the law no longer treated capital gains as regular income but instead as long-term capital gains.

As also seen with EGTRRA, passed in June of 2001 during President George W. Bush’s first year as president, the law was not initially conceived to continue forever. By 2004 the U.S. economy was performing well, with GDP between 3-4%. Some economists consider the ideal range for GDP to be 2-3%. As we now know, the economy overheated with a variety of speculative new investments in housing and elsewhere leading to the crash of 2008, one of the worst recessions in U.S. history. As a result of the 2008 Great Recession, President Obama and Congress had their hands tied with both the EGTRRA of 2001 and the JGTRRA of 2003 and neither law was ended as intended when first passed. 

Sunset Provisions and the JGTRRA

The global economy is a delicate balancing act and many would argue the U.S. economy is now very much out of balance with a nearly $21.0 trillion budget debt. As any household knows, you cannot increase spending and reduce income and make ends meet without borrowing. It’s politically expedient to make short-term fixes during difficult times, but the question lingers whether there is any practical way to enforce the sunset provisions put into place at the time of passage. As just one example, the tax cuts passed in late 2017 call for the individual tax brackets to revert to their former levels by 2025. 

Sunset provisions have been around for a long time. Thomas Jefferson believed no law passed by one generation should continue into the next. At its most philosophical level, this generational concern has presided over the usage of sunset clauses as a form of fairness in society. The last thing the parents of one generation want is to leave the world worse off for their children. Given the recent popularity in U.S. politics of using the sunset clause as the only way to push through tax cuts, we now have a $21.0 trillion debt burden likely to affect several generations.

  1. Bush Tax Cuts

    The Bush tax cuts are a series of temporary income tax relief ...
  2. Jobs And Growth Tax Relief Reconciliation ...

    An act passed by congress that was intended to improve the economy ...
  3. Sunset Provision

    A sunset provision is a clause in a piece of legislation that ...
  4. Tax Reform Act Of 1986

    The Tax Reform Act of 1986 is a law passed by Congress that reduced ...
  5. American Taxpayer Relief Act Of ...

    The American Taxpayer Relief Act of 2012 was passed in response ...
  6. Provision

    A provision is a stipulation in a contract or legal document ...
Related Articles
  1. Taxes

    Trump Signs Tax Reform Bill

    The president signed the GOP's overhaul of the federal tax code into law.
  2. Taxes

    Capital Gains Tax Cuts For Middle Income Investors

    Find out how TIPRA plans to slash taxes for those in the 10-15% tax bracket.
  3. Taxes

    How Taxes Affect The Economy

    Learn how tax changes have historically affected the economy over the past three decades.
  4. Taxes

    Why America's Taxes Are Too Low

    The solution to America's economic woes may not be in lowering taxes further, but may, in fact, lie in increasing them.
  5. Taxes

    How Tax Cuts Stimulate the Economy

    Learn the logic behind the belief that reducing government income benefits everyone.
  6. Taxes

    3 Ways To Avoid The Dividend Tax Hike

    Find out how you can offset the potential tax hikes.
  7. Insights

    Opinion: Why Corporate Tax Cuts Won't Make America Grow

    The federal debt will go up and, surprisingly, a number of corporations will actually lose money if the Trump tax plan becomes law.
  8. Retirement

    Income Taxes and Your Retirement Accounts

    Converting a traditional IRA or 401(k) to a Roth IRA may save you money on your taxes.
  9. Taxes

    3 Tax Implications of Dividend Stocks

    Dividend paying companies are attractive in a low interest rate environment, but income seeking investors have to be careful of the potential tax hit.
  10. Taxes

    Reducing Your Tax Burden in Retirement

    Implementing tax diversification in a retirement portfolio can lead to more money in your pocket.
  1. What major laws regulating financial institutions were created in response to the ...

    Read about the major federal responses to the financial crisis of 2008, such as the Dodd-Frank Wall Street Reform Act and ... Read Answer >>
  2. How Does The Marginal Tax Rate System Work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. Learn how the marginal ... Read Answer >>
Trading Center