Here are my thoughts on this tax cut.
1) Dividend cut. This will in reality only help those who are already millionaires. Warren Buffet will get 0.02% of the entire tax cut. What percent will Bill Gates get? Compile a list of the top 100 richest American's and they will get the vast majority of this tax cut. So esentially we will be pooring $100 billion or so into the hands of a very few of the world's richest people. What will they do with the money? Swiss bank accounts maybe, buy some more stocks, etc. They are already spending as much as they want, so this chunk will not increase spending, so this chunk will not stimulate the economy. I don't see the point of this part of the tax cut.
2) Individual rate cuts. This would be a nice thing to see for each individual. However a cut from 36% to 35% isn't very significant. This will partially stimulate the economy - but as others have said they might put part of that into savings instead.
3) Increase in standard deduction for married couples. I have mixed feelings on this issue. A couple living on $50,000 per year is a lot wealthier than two individuals making $25,000 each (since the couple only has one rent payment and gets lower prices on other things like insurance). So since I feel we should tax wealth (note this is different from taxing income) in principle I agree with the marriage penalty. But I can see how this will help some couples and could stimulate the economy slightly.
4) Moving the child credit to now instead of the future. Why on Earth did Bush want this pushed back so far into the future in his inital tax cut? It should have been active last year. At least he is making up for his mistake.
There are problems with tax cuts in general though.
1) If you cut taxes when in debt, this is basically a loan. We will have to pay for it with higher taxes in the future - with interest. So in the long run, cutting taxes means we must pay more taxes. I'd rather pay them now to have a lot lower taxes in the future. But most people cannot look that far into the future. Or they make unrealistic assumptions hoping to make a model showing that you can cut taxes now so that the economy is so stimulated that you can keep them cut. Unfortunately those models have never worked.
2) The other way to cut taxes without a loan is to cut spending. Suppose to pay for this tax cut, the government cut spending by $350 billion. Basically the government is unaffected - $350 billion less tax offsets $350 billion less spending. But how is the economy affected. That $350 billion in spending cuts means a lot of people depending on government jobs must be fired. If the country spends all that $350 billion, then these fired people can switch jobs and everything is the same. But what if half of that $350 billion is saved instead of spent (which is likely since most will go to the richest of the rich)? That means the government spends $350 billion less, and America spends $175 billion more. Net effect is a $175 billion LOSS to the economy. Thus all tax cuts paid for by cutting spending will HURT the economy.
So do the benefits outweigh the problems? In my opinion this tax cut as it is done has problems that outweigh the benefits.
Here are my suggestions to solve the same problems:
1) Bush wants to end the double taxation of dividends and stimulate the economy. But giving money to Warren Buffet won't stimulate the economy. He'll just pocket the savings. Instead eliminate the corporate tax on all money given out in dividends. That way the double taxation is ended, and the businesses have more money which a lot will be spent on hiring employees. That will work a lot better than the current plan at meeting Bush's goals.
2) Want to elimiate the marriage penalty? That is fine. Increase the married deduction and reduce the individual deduction in a way that the government still collects the same amount of taxes. Thus for free you ended the marriage penalty.
3) I'd bump the child credit even more than what Bush wants. That gives money to those who are most likely to spend it (thus stimulating the economy the most).
4) Cut the individual tax levels more than 1 or 2 percent instead of reducing the dividend tax.
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