March 8, 2001 11:42 AM | Permalink |
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Newly revised estimates by the Congressional Joint Committee on Taxation show that the cost of the tax plan proposed by President George W. Bush would be substantially greater than the $1.6 trillion estimate generated last year. On March 1, the House Ways and Means Committee approved H.R.3, which would implement the income tax rate cuts proposed by Bush under a slightly accelerated schedule. A March 7 analysis by Citizens for Tax Justice, based in part on JCT’s analysis of H.R. 3, finds that the total ten-year cost of the Bush tax plan, as modified by H.R. 3, would be in excess of $2.4 trillion. In particular, CTJ’s analysis shows that:
|How Much Does the Bush Tax Plan Cost?
Fiscal Years 2002-2011, $Billions
|Bush May 2000 Estimate:||$1,564|
|Add: Speeding up rate cuts, new CBO projections||$148|
|Add: Cost of fixing AMT (Bush-caused part only)||$292|
|Add: Interest payments||$413|
- H.R. 3’s accelerated income tax rate cuts, combined with revised estimates of economic growth since last May, increase the cost of the Bush plan by $150 billion over ten years. This brings the ten-year cost of the Bush plan’s provisions to over $1.7 trillion.
- Because the Bush plan (like H.R. 3) reduces income tax rates without modifying the Alternative Minimum Tax (AMT), millions of additional taxpayers would be forced to pay the AMT when the plan is fully phased in, an outcome which all parties agree is unrealistic. According to JCT, adjusting the AMT to fix this problem would add almost $300 billion to the Bush plan’s cost. That brings the ten-year cost to just over $2.0 trillion.
- The $2.0 trillion cost of the Bush plan reduces the amount of surplus revenues that can be devoted to reducing the federal debt by $2.0 trillion. This means that the federal government will pay an additional $413 billion in interest payments as a direct result of the Bush plan. Factoring in these additional interest payments brings the ten-year total cost of the Bush plan to $2.417 trillion.