Later Higher Costs Seen in Rival Tax Plans : Budget: Analysis finds trend could worsen federal deficit in years ahead. Says Clinton plan could cost $173 billion in a decade, GOP plan $712 billion.

The costs of the major tax plans offered by President Clinton and Republican congressional leaders would increase sharply after five years, according to an analysis issued Saturday by the Treasury Department.

That trend could, in turn, threaten to worsen the federal budget deficit by the turn of the century.

In its official estimate of the costs of both Clinton’s new middle-class tax-cut package and the broad menu of tax cuts included in the House Republicans’ “contract with America,” the Treasury Department said the Republican plan would cost four times as much as the Clinton plan over 10 years.

Department analysts said the Clinton proposal would cost $59.9 billion over five years and a cumulative $173.6 billion over 10 years.

That means that the costs in the second five years of the proposal would be $113 billion--roughly double the costs in the first five, Treasury officials said.

Yet the Treasury analysts warned that the costs of the Republican plan, which includes a wide array of tax cuts for the middle class, the affluent and for businesses and investors, would be $712 billion over 10 years--quadruple the costs of the Clinton plan over a comparable period.

Over five years, the GOP contract would cost $197.2 billion, the department said.

The Treasury estimates for the GOP contract are far higher than the figures released by House Republican leaders. The Republican staff of the House Budget Committee said the GOP package would cost $147.9 billion over five years.

The Treasury Department is responsible for issuing the executive branch’s official estimates of the costs of tax and revenue proposals. The Joint Tax Committee, Congress’ official arbiter of the costs of tax plans, has not yet issued its own estimates of either the Republican contract or the Clinton plan.

Treasury officials said the costs of the Republican contract would balloon in the second five years, largely because many of its tax provisions are “back-loaded” to provide most of the benefits later.

Because most budget policies are set for five-year periods, such back-loaded tax proposals have become attractive to lawmakers in this era of fiscal restraint. Back-loading allows lawmakers to avoid having to immediately decide how to pay for tax breaks without increasing the deficit.

The Treasury said the GOP proposal for “neutral cost recovery”--a tax change that would allow businesses to write off the costs of new investments immediately, rather than waiting several years--would have a 10-year cost of $169.5 billion.

In their own estimates, the Republicans argued that “neutral cost recovery” would actually generate $19.5 billion in new tax revenues in its first five years.

The Treasury estimates that the 10-year cost of the Republican proposal to slash the capital gains tax would be $170.4 billion--compared with five-year costs of $57.5 billion. The Republicans estimate that their capital gains plan would cost $56 billion over five years.

Clinton’s plan carries higher costs in the distant future too, the Treasury found. Clinton’s proposal for expanding individual retirement accounts would cost $3.7 billion over the first five years but would have a 10-year cost of $23.3 billion, the Treasury said.

The Administration’s new tax deductions for education and training would cost $20.6 billion over the first five years but $60.7 billion over 10 years, the department said.

The President’s $500-per-child tax credit would have a 10-year cost of $89.6 billion, compared with $35.6 billion over its first five years, the department said.