President George W. Bush has long supported tax cuts as the best policy to invigorate the economy and provide financial relief for American families.

During his first term in the White House, the president has enacted four tax cuts worth roughly $1.9 trillion over a ten-year period. The president credits his tax cuts for helping the nation recover from the economic recession, corporate scandals and the Sept. 11 attacks. If elected for a second term, Mr. Bush says he would work to make these tax cuts permanent.

Even before becoming the 43rd U.S. president, tax cuts played a central role in Mr. Bush's fiscal policy agenda. As governor of Texas (1995 - 2000), Mr. Bush passed two of the largest tax cuts in Texas history. Though Texas is one of the few states without an income tax, then-Governor Bush managed to push through nearly $3 billion in tax reductions in 1997 and 1999.

During his 2000 campaign for the White House, Mr. Bush made tax relief a centerpiece of his domestic agenda, calling for sweeping cuts in income tax rates, a tax break for married couples and an increase in the child credit.

Once in office, the president set to work to fulfill that campaign promise. In February 2001, he warned of "troubling" economic signs as he urged Congress to approve his tax cut plan intended to jump-start the ailing economy.

On June 7, 2001, the president signed a ten-year, $1.35 trillion tax relief package -- representing the largest tax cut in the last 20 years. The Economic Growth and Tax Relief Reconciliation Act of 2001 reduced income tax rates, the "marriage penalty" tax on two-income couples, the estate or "death" tax, and expanded the child tax credit.

In early March 2002, the president enacted his second tax relief package, the Job Creation and Worker Assistance Act of 2002. Though a relatively minor tax cut, the bill aimed to provide certain measures of relief for businesses and individuals, notably those affected by the Sept. 11, 2001 terrorist attacks.

The president's third major tax bill, the Jobs and Growth Tax Relief Reconciliation Act, signed on May 28, 2003, served as an elaboration and acceleration of the 2001 tax cut.

The 2003 bill immediately moved "several million working Americans" into the lower 10 percent tax bracket, "allowing them to keep more of their income," and increased the child tax credit from $600 to $1,000 for qualifying middle- and lower-income families, according to the Bush campaign.

The package, worth about $350 billion in tax cuts over ten years, also slashed taxes on dividends, which lowered tax rates on dividend income from nearly 40 percent to 15 percent for the roughly 35 million American households with stock investments, President Bush has said.

Additionally, President Bush persuaded Congress to reduce the capital gains income tax rate from 20 percent to 15 percent, a rate scheduled to expire in 2007, and to raise expense limits for small businesses from $25,000 to $100,000. Together, these measures act to help companies grow and encourage job-creating investment, the Bush campaign says.

Over the summer of 2004, President Bush urged Congress to extend his tax relief initiatives. Indeed, just six weeks before Election Day, Congress approved an extension of tax cuts targeting middle-income Americans, due to expire at the end of 2004.

The $146 billion tax cut -- the president's fourth in as many years -- extends the increased $1,000 child tax credit through 2009, the expanded 10 percent income bracket through 2010, and tax relief for married couples through 2008. The legislation, called the Working Families Tax Relief Act, also extended 23 business tax credits for another year. In fact, the largest portion of the package, roughly $13 billion, will go to businesses to help fund research and development projects.

President Bush vows to make all tax cuts permanent so that "America's families can make plans for the future, without worrying these plans could be jeopardized by higher tax expenses in the future" and "to ensure sustained growth and job creation."

The president has also suggested he would seek to overhaul and simplify the tax code if elected for a second term. In his 2004 re-nomination acceptance speech at the Republican National Convention, President Bush called for a transformation of the tax system into a straightforward and fairer code that would provide new incentives for people to save money.

"The American people deserve and our economic future demands a simpler, fairer, pro-growth system. In a new term, I will lead a bipartisan effort to reform and simplify the federal tax code," the president said.

For his tax reform, Mr. Bush proposes to:

-- make permanent the income tax rate relief with the new lower 10 percent bracket and the reduced "marriage penalty" taxes;

-- extend indefinitely the capital gains tax cuts, set to expire in 2009;

-- eliminate the dividend taxes entirely;

-- eliminate the estate, or "death," tax entirely; and

-- simplify the tax code.

Bush 2004: Jobs & the Economy

The White House: Jobs & Economic Growth

Sen. John Kerry, D-Mass., has pledged to reduce taxes for middle- and lower-income families, cut corporate income taxes and close corporate "loopholes."

Senator Kerry has also vowed to repeal President Bush's income tax cuts for the top 2 percent of income earners -- individuals earning more than $200,000 -- and use those funds for health and education programs.

The Democratic presidential candidate says he would act as a champion to the middle class by enacting a tax reform plan that would benefit those who needed it, rather than the wealthier class, with his planned $419 billion in new tax cuts aimed at the middle class.

"I will roll back the Bush tax cuts for the wealthiest Americans. However, I don't believe that we should be raising taxes on the middle class. Specifically, I want to protect the increases in the child tax credit, the reduced marriage penalty, and the new 10 percent tax bracket that helps people save $350 on their first level of income," Kerry said in a Jan. 25, 2004 interview with the Associated Press.

If elected as the next president, Senator Kerry says he would raise the child and dependent care tax credit to cover up to $5,000 in expenses, up from the current $3,000 maximum.

The senator says he would pay for his tax relief program by rolling back the tax cuts for the wealthiest taxpayers and closing certain corporate tax "loopholes," also called "corporate welfare" by its critics.

The Democratic presidential nominee says that current tax laws enable U.S. companies to avoid paying domestic taxes through certain evasive practices by, for example, incorporating a business in overseas "tax havens," such as Bermuda, and moving jobs to low-tax havens.

Senator Kerry has said he would end "tax benefits that encourage outsourcing and actually reward American companies for moving jobs overseas."

His international tax reform also includes a plan to reduce the gap between U.S. corporate tax rates and foreign corporate rates, which are much lower than national rates and therefore more attractive to U.S. businesses. Under Senator Kerry's proposal, companies would be taxed on their foreign subsidiaries' profits as much as they are on domestic profits.

Eliminating such tax shelters would give the U.S. government an average of $12 billion annually, which would then be used to "cut corporate taxes by 5 percent," according to the candidate's tax reform proposal.

"I will close the tax loopholes that reward companies for shipping jobs overseas. Instead, we're going to use that revenue to reward companies that create and keep good jobs here in the United States of America. Under my plan, we'll cut the corporate tax rate by 5 percent, giving 99 percent of businesses a tax break," Senator Kerry said in a speech before the Detroit Economic Club.

Additionally, the senator plans to offer companies a one-year tax holiday of 10 percent on any profits they repatriate to the U.S. economy. "The tax holiday would result in an immediate revenue gain which would pay for the New Jobs Tax Credit -- another boost to job growth in America," according to Senator Kerry's campaign Web site.

Furthermore, the Democratic candidate supports a corporate rate reduction for manufacturers who continue to produce goods in the United States. Along those lines, Senator Kerry has proposed a new tax credit to encourage manufacturers to expand their payrolls in the United States rather than "offshore" jobs to foreign nations.

"Let me be clear: Under my plan, 99 percent of American businesses and 98 percent of Americans will get a tax cut," Senator Kerry said in an April 7 speech.

If elected president, Senator Kerry plans to:

-- maintain tax cuts for middle- and lower-income taxpayers;

-- repeal President Bush's tax cuts for individuals or families earning more than $200,000;

-- eliminate corporate tax incentives to outsource U.S. jobs to other countries;

-- close corporate tax loopholes, such as offshore tax havens; and

-- enact tax cuts for small businesses, and provide tax credits to businesses that repatriate profits and job positions to the United States from abroad.

Kerry 2004: A Stronger Economy

Vote by Issue Democratic Primary Quiz: John Kerry on the Issues