Can Tax Reform Generate .04 Percent Growth? Short Answer: No
I’ve written a lot recently about the fact that the GOP tax reform is not tax reform.
Even Larry Kudlow agrees GOP tax reform bill isn't tax reform https://t.co/vZYhyO6yBI
— mike sax (@mikesaxny2) November 29, 2017
And on the elements this is a terrible, awful, cruel, bad, very bad, no good fake tax reform bill:
Fake GOP tax reform bill to raise taxes on people making $30,000 per year by $17,000 by 2027 https://t.co/EfMJI9DZ40
— mike sax (@mikesaxny2) November 29, 2017
Indeed, you can pretty much do the fake GOP tax reform dozens:
A: The fake GOP tax reform bill is bad!
B: How bad is it?
A: It’s so bad
1. It raises someone making $30,000 per year by 2027 by $17,000 dollars. Yes $17,000 dollars.
2. It’s so bad it raises taxes on someone working full time at $14 per hour by 2019.
3. It’s so bad that it raises 83 million Americans who make less than $100,000 per hear.
4. It’s so bad it takes away the healthcare of 13 million Americans
5. It’s so bad it decimates both seniors and students.
Ok so it’s a terribly regressive tax bill that is wrongly named tax reform.
But what about the GOP claim that this bill will raise growth by .04% GDP per year? Well as noted this isn’t tax reform as it raises the deficit by $1.5 trillion dollars.
But would real tax reform raise growth by this much? The short answer is probably not. There is certainly no historical precedent that it would.
It turns out tax cuts don’t pay for themselves.
“Well-crafted tax reform would improve economic growth. While pro-growth tax reform can generate some revenue to the Treasury from the added growth, as we’ve shown before, tax cuts don’t pay for themselves.”
“In the recent tax debate, a number of lawmakers and advocates have made a seemingly more modest claim – that tax cuts and reform can accelerate the economic growth rate by 0.4 percentage points or more per year and thus pay for the tax cutscurrently under consideration. In reality, however, 0.4 percentage points more of annual growth will likely cover less than two-thirds of the House or Senate tax plans’ $1.4 trillion cost; and less than one half of the $1.9 trillion true cost, if various expiring provisions continue.”
“Additionally, while 0.4 percentage points might sound small, such an increase in growth is highly unlikely to materialize as a result of tax reform alone.”
“In this paper, we show:
- Reasonable estimates of the current tax proposals will likely increase growth by no more than 0.1 percentage points per year on an ongoing basis.
- Official government estimates of past tax reform proposals have never found a dynamic response as large as 0.4 percentage points per year.
- Rosy estimates of the House and Senate tax plans that suggest they could achieve a 0.4-point hike in the annual growth rate make the heroic assumptions of ignoring the cost of higher debt and assuming permanence.
- Even increasing the growth rate by 0.4 percentage points would not be enough to offset the cost of the House and Senate tax cuts.
“There is no history for any tax cut or tax reform bill raising growth anywhere near 0.4% annually.”
“Increasing growth by 0.4 percentage points on a sustained basis might sound doable, but such an increase actually means raising projected growth rates by more than one-fifth and is unlikely to occur because of tax reform alone.”
“Certainly, policymakers should work toward enacting reforms to improve economic growth by as much as possible, and tax reform is one critical piece of a comprehensive growth plan. But the tax reform plan under consideration is unlikely to generate more than 0.1 percentage points of increased growth per year, and over the long run it may actually slow economic growth. Lawmakers should not pretend otherwise but should instead both work to improve the bill and enact other pro-growth policies, including improving the debt trajectory, entitlement reform, regulatory reform, and labor market improvements. Here are some policies that might help.”
At the end of the day this fake tax reform bill is actually a stealth ACA repeal. It must be defeated. As Voltaire would say Crush the infamous thing.
P.S. I’m Mike Sax, I’m running for Congress in the NY 2nd District and I’m a Hillary Clinton Democrat.
Meeting her recently was one of the biggest honors in my life to stand next to such a fine public servant and trailblazer. She seemed to like our Impeachment Train campaign t shirts too!
Think of the shirt as a one time investment in restoring legitimacy to this country.
And please donate so we can compete with Peter King’s $4 million. I know no lobbyists or millionaires like Peter King. Small donations are the engine of the Mike Sax NY2 campaign. Together we can do it. Because we must.