...a recent hindsight
estimate of the cost of the Bush tax cuts came
from the liberal Citizens for Tax Justice who used it as an opportunity to compare the Bush tax cuts' cost to health care reform.
According to CTJ, the Bush tax cuts that were passed up through 2006 (the 2001 and 2003 cuts as well as other smaller cuts in 2004, 2005 and 2006) ended up
costing the Treasury approximately $2.1 trillion in foregone revenue from 2001 to 2010. CTJ claims that if you add interest payments, that number goes up to around $2.5 trillion.
These numbers were calculated
using CTJ's ITEP model. From what we could tell from their methodology paper, they
assumed no feedback effect that would generate additional revenue. With that caveat, there is no reason to doubt these numbers. Therefore, the $2.1 trillion cost ($2.5 trillion with interest) on the Bush tax cuts is a high-end estimate. Note that
also included in CTJ's $2.1 trillion estimate is the
cost of annually adjusting AMT, which was technically not part of most of the "Bush tax cuts." (The annual cost of "patching" AMT went up as a result of the Bush tax cuts because the Bush tax cuts reduced mostly regular income taxes and taxpayers pay the higher of their regular income tax and their alternative minimum tax.)
Using CTJ's numbers,
if one assumes that 20 percent of the tax cuts paid for themselves (overall), the non-interest cost would be approximately
$1.7 trillion.
If one assumes that half of the tax cuts paid for themselves (which we would consider to be a pretty extreme assumption),
then the tax cuts would have cost around $1 trillion over the past 10 years.
