|
Thursday, July 17, 2008
New CBO Report Shows Dire Consequences of Bush Tax Cuts, AMT Patching
The CBO has released a report detailing the effects of indexing the the AMT to inflation (i.e. "patching" it so that fewer households would pay it than otherwise anticipated) and extending the 2001-2003 Bush tax cuts without offsetting the revenue loss.
If the Bush tax cuts are allowed to expire and if the AMT continues its ever-deepening reach into the middle class, the federal debt held by the public will increase from today's 37 percent of GDP to 115 percent in 2050. If AMT is indexed for inflation to limit its impact on the middle class, that debt figure becomes 115 percent in 2050. If the AMT is indexed for inflation and the Bush tax cuts are extended, federal debt held by the public jumps to 190 percent in 2050.
The Budgetary Effects of Indexing the AMT and Extending the 2001-2003 Bush Tax Cuts
(percent of GDP) |
| 2007 | 2030 | 2050 | 2082 |
Bush Tax Cuts Expire, AMT Not Patched |
| Budget Deficit | -1.2 | -1.0 | -4.6 | -18.1 |
| Debt Held by the Public | 37 | 12 | 50 | 240 |
AMT Indexed to Inflation |
| Budget Deficit | -1.2 | -3.0 | -10.0 | -29.8 |
| Debt Held by the Public | 37 | 29 | 115 | 435 |
Bush Tax Cuts Extended, AMT Indexed to Inflation |
| Budget Deficit | -1.2 | -6.1 | -15.0 | 39.3 |
| Debt Held by the Public | 37 | 63 | 190 | 602 |
| |
| Source: Congressional Budget Office |
Deficit financing of these tax cuts has a pernicious effect, reducing per capita income by 13 percent in 2050. But, "[b]eyond 2073, projected deficits under those tax policies
would become so large and unsustainable that CBO's model cannot calculate
their effects."
(click to enlarge)CBO: Long-Term Effects of Indexing the Alternative Minimum Tax and Extending the Tax Reductions of 2001 and 2003
Posted by Craig Jennings
|