DES PLAINES, IL - MARCH 23: The top of a form 1040 individual income tax return for 2005 is seen atop a stack on the same at the Des Plaines Public Library March 23, 2006 in Des Plaines, Illinois. Americans are preparing for the income tax filing deadline next month whether using tax software, filing on the paper forms or using a tax preparer.  (Photo by Tim Boyle/Getty Images)

A Congressional Research Service (CRS) report released October 27 said that if Congress were to permanently extend the expiring 2001 and 2003 tax cuts, it would cost more than $5 trillion over ten years, according to a story from the Bureau of National Affairs.  The report is actually an update of an earlier report on the tax cuts (which can be seen here).

The earlier CRS report had estimated the cost of extending the tax cuts would be $2.8 trillion over 10 years, but that did not incorporate debt payments and indexing of the alternative minimum tax (AMT) to inflation.  The new report also had ominous news that federal tax revenue would have to be permanently increased by 4.6 percent of the gross domestic product (GDP) simply to maintain the current debt-to-GDP ratio at the current level over the next 75 years even if the tax cuts expired.

Congress is expected to debate extending the 2001 tax cuts when they return after Tuesday’s elections.  At issue is whether to permanently or temporarily extend the cuts to two brackets: those making over $250,000 annually and those making under that amount.  The president supports a permanent extension of the tax cut for those under $250,000 (the “middle class tax cut”) but the administration has signaled a willingness to discuss different compromises.