Revised February 13, 2001

How Much Would The Bush Tax Cut Cost?

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On February 6, the Center on Budget and Policy Priorities issued an analysis, "Cost of the Bush Tax Cut Rises; Making Rate Cuts Retroactive Adds $400 Billion." The report concludes that the tax cut plan proposed by the Administration could cost as much as $2.5 trillion over a ten year period. The report makes the following points:

The total costs of the proposed ten-year tax cut thus includes $1.6 trillion in revenue losses over the period 2002-2011, another $200 billion in revenue losses caused by the changes that inevitably will be made to the AMT so that it will not encroach heavily upon the middle class, and an additional $400 billion in interest costs. The total (with rounding) is $2.1 trillion over ten years. The total rises to $2.5 trillion if the proposed rate cuts are made effective immediately rather than being phased in gradually through 2006 and these added costs are not offset by scaling back other parts of the plan.

End Notes:

1. The figure of $1.3 trillion covered the nine years from 2002 through 2010, whereas the figure of $1.6 trillion covers the full ten-year period 2002-2011.