What Tax Relief Is

tax relief is the process by which the government offers tax incentives to people, organizations or industries to enable them make capital gains and facilitate economic growth. It also acts as a way of encouraging investments.

The Economic Growth and tax relief Reconciliation Act of 2001 (EGTRRA) made significant changes in several areas of the US Internal Revenue Code. In general, the act lowered tax rates and simplified retirement and qualified plan rules such as for Individual retirement accounts and pension plans. Many of the tax reductions in EGTRRA were designed to be phased in over a period of up to 9 years.

Many of these slow phase-ins were accelerated by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). It was passed by the United States Congress on May 23, 2003 and signed by President Bush on May 28, 2003. Among other provisions, the act accelerated certain tax changes passed in the Economic Growth and tax relief Reconciliation Act of 2001, increased the exemption amount for the individual Alternative Minimum Tax, and lowered taxes of income from dividends and capital gains.

Critics state that the tax cuts have failed to spur growth, while increasing the budget deficit, shifting the tax burden from the rich to the middle and working classes and further increasing already high levels of inequality. The Congressional Budget Office estimated that the tax cuts would increase budget deficits by $60 billion in 2003 and by $340 billion by 2008. Supporters of the president argue that this analysis ignores the potential growth that the act could encourage.

On August 25, 2006 The Property tax relief Act of 2006, proposed by Idaho governor Jim Risch was passed by the Idaho Legislature in the U.S. in theory it was to, reduce property taxes by $260 million by eliminating the public schools maintenance and operation levy on Idaho real property. About 60% of the tax relief would go to businesses, 40% to residential property owners, raise the Idaho sales tax $210 million, to six percent, effective October 1, 2006, place $100 million into the Public Education Stabilization Fund; and place an advisory question on the November general election ballot asking Idaho voters if they agree with the property tax relief adopted by the legislature in August.

Another example would be the New York State School tax relief Program (STAR Program), is a school tax rebate program offered in New York State aimed at reducing school district property taxes on the primary residences of New York residents. The program was enacted on August 7, 1997, a product of the annual budget of then-Governor George Pataki. The STAR Program takes two forms, the Basic STAR which is open to the primary residence of any New York State resident and exempts $30,000 from the true value of a home or property and the Enhanced STAR, for eligible senior citizens at or above age 65, exempts an annually variable amount - $56,800 for the 2008-2009 school year - from the true value of their primary residence.

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