House approves $550bn tax cut

Plans to cut US taxes by hundreds of billions of dollars have been approved by the US House of Representatives.

But President George W Bush's original proposals have been pared down from $726bn (£452bn) to $550bn.

The measure has yet to be passed by the Senate where leaders have pledged to pass a tax cut of no more than $430bn.

As part of his "jobs and growth" package Mr Bush wanted to eliminate taxes on dividends paid to shareholders.

A tax cut that helps spur investment by businesses is one of the smartest ways to achieve long-term growth in the US economy and job market

Thomas Donohue, US Chamber of Commerce

The House of Representatives decided to reduce rather than abolish the taxes on dividends.

"This economy needs help and it needs it now," said House Speaker Dennis Hastert before the vote.

"The proposal before us will create 1.2 million new jobs."

The bill was passed by 222 votes to 203.

Mounting debts

The US Chamber of Commerce welcomed the move and said tax cuts were one of the best ways of stimulating the economy and jobs growth.

"A tax cut that helps spur investment by businesses is one of the smartest ways to achieve long-term growth in the US economy and job market," said the chamber's president, Thomas Donohue.

Republicans who welcome the tax cuts say they will boost the weak economy, create jobs and generate tax revenues.

But Democrats have called the plan a reckless tax cut that will contribute to nearly doubling the nation's debt to $12 trillion over the next decade.