On March 4, the Congressional Joint Committee on Taxation (JCT) released its estimates of the costs of the tax provisions contained in the President’s FY 2004 budget proposal. Since the President’s Budget proposal is just that – a proposal – these analyses are important for providing a neutral examination of these policy changes that can permanently affect the federal government’s resources.

On March 4, the Congressional Joint Committee on Taxation (JCT) released its estimates of the costs of the tax provisions contained in the President’s FY 2004 budget proposal. Since the President’s Budget proposal is just that – a proposal – these analyses are important for providing a neutral examination of these policy changes that can permanently affect the federal government’s resources.

The JCT report puts the total 11-year (2003-13) cost of the President’s latest tax cut proposals, labeled an “economic growth plan,” (acceleration of the 2001 tax cut’s individual marginal rate reductions, acceleration of child tax credit and married tax filers’ deduction, increase business expensing provisions, and eliminate dividend tax) at $725.8 billion – more than $50 billion more than the White House estimated. Just the elimination of the corporate dividend tax, the most controversial element of the President’s recent tax break proposals, costs $396 billion over ten years. The cost of this proposal rises steadily over the course of the 10 years covered by the analysis, such that the elimination of the corporate dividend tax drains $59 billion from the country’s resources in 2013, alone.

The other extremely costly element of the President’s tax cut proposal beyond his economic growth plan is the permanent extension of those 2001 tax cut proposals that expire over the course of the next 7 years. The cost through 2013 of this proposal totals $624 billion, with permanent repeal of the estate tax ($162 billion) and the permanent reduction of the marginal income tax rates ($351 billion) the most costly elements of the proposal.

The 2003-13 cost of all of the tax cut proposals included in the President’s budget submission comes to a jaw-dropping $1.57 trillion total. This does not include increased interest costs on the national debt, nor does it count the full cost of adjusting the individual Alternative Minimum Tax (AMT). Even under the best budget, economic, and international circumstances this would amount to too much spending on the wrong priorities, but given the number of pressing domestic needs, our current economic slowdown, high unemployment rate, the states’ worst budget crisis in more than 50 years, and an impending costly war with Iraq, the country simply cannot afford to waste money providing additional tax breaks to those who are least in need of these giveaways.