Bush, Congress Hide True Costs of Permanent Tax Cuts

The first simulation assumes current tax policy would remain unchanged — or that tax cuts passed in 2001 and 2003 would expire as scheduled. Under this simulation, the tax cuts include all provisions except the Alternative Minimum Tax (AMT). In the simulation, the AMT would have all of its parameters indexed to inflation and the exemption currently in place would be extended permanently. The second simulation assumes all of the tax cuts from 2001 and 2003 would be extended permanently, including the AMT.
CBO found that under the first tax policy, revenues would slowly climb back to 20 percent of gross domestic product by 2015 from their historically low levels of approximately 16 percent of GDP today. Under the second simulation, it would take until 2050 for revenues to grow to 20 percent of GDP. The difference between these two options, according to the CBO, is an enormous amount of debt for the American people.