Treasury: Extending Tax Cuts Would Cost Billions

WASHINGTON -- Key White House tax proposals would cost the U.S. government tens of billions of dollars in lost revenue, the Treasury Department said on Monday, although the administration says they will help boost revenues in the long run, Reuters reported.

Making permanent expiring tax breaks for dividends and capital gains, which expire at the end of 2008, would cost the government $7.74 billion in 2008 and $37.02 billion in 2009, Treasury said in its "Blue Book" description of revenue proposals in President Bush's fiscal 2007 budget.

Extending lower marginal tax rates for individuals, which are set to expire at the end of 2010, would push foregone tax revenues to $119.39 billion in 2011, Treasury said.

Although Treasury shows the tax cut extensions as losing revenue, administration officials say increased investment from extending the breaks will lead to greater investment and economic growth, and in the end, more returns to government coffers.

Lower tax rates on profits from investment have "been integral to generating economic growth," Treasury spokesman Tony Fratto told reporters at a briefing.

-- NYSSCPA.org News Staff

Posted on 2/7/06