In May 2010, the Pew Fiscal Analysis Initiative released Decision Time: The Fiscal Effects of Extending the 2001 and 2003 Tax Cuts, which examined four options for extending the tax cuts. Since then, another option has attracted attention: extending the tax cuts for only two years to individuals making less than $200,000 and married couples earning less than $250,000. Pew’s analysis of the latest proposal finds that it would cost $387 billion, including interest costs, over the next decade. In contrast, a permanent extension of these tax cuts for the “middle class” (as defined in the President’s fiscal 2011 budget) would cost $2.2 trillion over the next decade, while extending the cuts for everybody would cost $3.3 trillion over the same period.
Addendum: Decision Time: The Fiscal Effects of Extending the 2001 and 2003 Tax Cuts is available for download as is the original report released in May.