Revised July 6, 2000

Cost of Tax Cuts the House or Senate Has Passed 
Or Are Expected to Pass Soon Total $649 Billion
by Jim Horney

Congress has already staked a claim on a substantial portion of the non-Social Security surplus anticipated over the next decade. If the Senate passes the "marriage-penalty" legislation the Finance Committee has proposed, tax cuts that the House, the Senate, or both chambers have approved this year would consume $649 billion over 10 years. These tax cuts include:

When duplication among the bills is eliminated, the aggregate revenue loss from their tax cuts equals $531 billion over 10 years and $154 billion over five years, with much of that amount consumed by tax cuts predominately oriented toward higher-income individuals. The budget resolution allows for additional tax cuts that could bring the five-year reduction in revenues to at least $175 billion. As the cuts passed by the House or Senate would absorb money that otherwise would be available for paying down debt, they would result in higher interest payments on the debt. The increased interest payments would amount to $118 billion over 10 years. The total cost of the tax cut proposals that have won approval this year thus would be $649 billion over 10 years, and $171 billion over five years.

Committing the federal government to these tax cuts would mean that $649 billion over the next decade would not be available for other purposes, such as bolstering the Medicare trust fund or reducing child poverty.

End Notes:

1. The $248 billion cost of the Senate bill does not take into account the effect of a provision included in the bill that would sunset the proposed changes in tax law at the end of calendar year 2004. This provision was included in the bill solely to avoid procedural hurdles in the Senate. It is extremely unrealistic, however, to assume that lawmakers would actually allow the marriage penalty changes included in this legislation to expire after just a few years.