- The Tax Policy Center released an analysis of GOP tax bill’s economic impact.
- The TPC found that the bill would only boost GDP by 0.7% in 2018, well short of growth promised by Republicans.
- The bill would also add $US1.23 trillion to the federal deficit over 10 years, even when adding in new revenue from economic growth.
A new analysis from a nonpartisan thank tank showed that the Republican tax plan would do little to boost economic growth and would cause the federal deficit to balloon.
The report from the Tax Policy Center showed that the Tax Cuts and Jobs Act (TCJA) would add just 0.7% to US GDP in 2018. It said the positive economic impact would diminish over time.
That falls short of the amount of economic growth advocates of the TCJA were expecting. President Donald Trump’s Council of Economic Advisors said the bill could boost economic growth by 3% to 5% a year, while supporters said the boost would be around 4%.
According to the TPC, the economic effects would slowly decrease over time, with a GDP boost of just 0.4% in 2021 and 0.1% in 2026. By 2027, after the individual tax cuts in the TCJA expire, there would be no economic boost, according to the TPC.
The analysis showed that the bill would fall short of “paying for itself,” as top Trump administration officials and Republicans have argued. Most advocates said that the bill would need to generate an additional 0.4 percentage points of GDP growth in order to make up the revenue shortfall.
But even factoring in $US179 billion of additional revenue, the TCJA would increase the deficit by $US1.23 trillion over 10 years, the analysis said.
The TPC’s analysis lines up with most other breakdowns of the tax bill’s economic impact. The Joint Committee on Taxation, the official government scorekeeper, projected in its analysis released Thursday that the bill would add 0.8% to GDP on average over the first 10 years after the bill went into effect.
The Senate is expected to vote on the TCJA on Friday.
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