Pablo Martinez Monsivais  /  AP
President Bush signs the $70 billion tax extension bill in a ceremony on the South Lawn of the White House on Wednesday.
updated 5/17/2006 4:39:57 PM ET 2006-05-17T20:39:57

President Bush signed a $70 billion tax-cut package Wednesday that Republicans hope will ingratiate them with voters as they head into midterm elections with worries about holding control of Congress.

“Our pro-growth policies stand in stark contrast to those in Washington who believe you grow your economy by raising taxes and centralizing power,” said Bush, who was joined at the signing ceremony by Vice President Dick Cheney. “They are wrong. Our pro-growth economic polices are working for all Americans.”

The GOP says the tax cuts, which were first enacted in 2003, have created millions of new jobs and bolstered tax revenue. Democrats overwhelmingly opposed the bill, saying the tax cuts on capital gains and dividends will flow mostly to rich Americans.

“The bill I sign today is a victory for the American taxpayers and is a strong lift for our economy,” Bush said.

The bill passed the Senate last Thursday by a 54-44 vote.

The legislation Bush signed provides a two-year extension of the reduced 15 percent tax rate for capital gains and dividends, which were set to expire at the close of 2008.

It also extends for one year recent changes to the alternative minimum tax to prevent it from hitting more upper middle-income families. The AMT was designed to hit the very wealthy, but it is now common for taxpayers, especially those with families in high-tax states, to pay the AMT on incomes of $100,000 and more.

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