CNN/Money 
Your Money
graphic
President Bush's wish list
Tax cuts, savings plans, home credits to be in State of the Union address.
January 19, 2004: 11:07 AM EST
Leslie Haggin Geary, CNN/Money staff writer

NEW YORK (CNN/Money) When he delivers the State of the Union address Tuesday, President Bush will push Congress to approve a new kind of savings account, expand home ownership and privatize Social Security.

The president also will try to make permanent a slew of tax perks including a reduction of capital gains and dividend taxes and an expanded child tax credit -- that are set to expire in coming years.

Bush will deliver the annual speech at 9 p.m. E.S.T. on Tuesday.

Overhauling Social Security

Experts say they anticipate the address will include another call to Congress to overhaul Social Security.

The issue was on his agenda when he ran for office and he appointed a bipartisan commission to study soon after he was sworn into office. But after the attack on the World Trade Center, it "fell to the sidelines," according to Michael Tanner, Social Security expert at the Cato Institute, a libertarian think tank.

"I think you'll see the beginning of a renewed push," said Tanner.

Specifically, expect Bush to propose allowing younger workers to invest their Social Security taxes in the stock market, while assuring retirees that their current benefits won't be reduced.

Permanent tax relief

Taxes also have been a cornerstone of the president's domestic agenda and he's been successful in getting Congress to approve massive cuts. In 2001, Congress passed a $1.35 trillion tax package, and last spring it enacted another round of tax cuts worth $350 billion.

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.

One way to get Democrats on board with those cuts was to make them temporary. Bush will now push for more, said Mark Luscombe, principal federal tax analyst at CCH.

"He's been pretty consistent in wanting to make the cuts permanent," Luscombe said.

The new $1,000 child tax credit, for example, is slated to shrink to $700 next year. Long-term dividend and capital gains tax rates which now stand at 5 percent and 15 percent are set to revert to 15 percent and 20 percent come 2009.

Estate taxes are slated to expire for 2010. But relief is temporary and they will be reinstated the following year for estates exceeding $1 million.

New savings plan

Bush is also expected to re-introduce a new tax-sheltered savings plan aimed at getting Americans to salt away more of their cash. The so-called Lifetime Savings Account would allow individuals to invest savings and have earnings grow tax-free.

They also would be withdrawn tax free and could be taken out at any time, for any purpose such as buying a car or paying the bills. That's different than, say, a Roth IRA, which allows earnings to grow and be withdrawn tax free, but only at retirement. (A Roth imposes penalties for early withdrawals.)

For more on LSAs, click here.

Home ownership incentives

Finally, experts say Bush will continue pushing initiatives to boost home ownership. Specifically, he is expected to ask for new tax credits to developers who build affordable housing.

Such plans have been included in three previous budgets and have bipartisan support, said National Association of Realtors Spokesman Walt Molony.  Top of page




  More on PERSONAL FINANCE
How can I protect my investments from inflation?
How to catch up on retirement savings in your 50s
How do you know you're really ready to retire early?
  TODAY'S TOP STORIES
7 things to know before the bell
SoftBank and Toyota want driverless cars to change the world
Aston Martin falls 5% in its London IPO




graphic graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.