TPC analysis: GOP tax plan would slow economy long-term
How many times have we heard from the GOP that this plan will grow the economy? Sorry to burst their bubble, but the Tax Policy Center confirms what we already knew—the GOP tax framework will not only explode the deficit and raise taxes on 47 million Americans, it will also slow the economy over the long term. From Politico Pro:
“A new analysis of the GOP tax reform plan concludes that it would boost the economy in the short term but slow it over the long term, reducing federal revenue by around $2.4 trillion over a decade.”
“The study by the nonpartisan Tax Policy Center runs counter to White House estimates.”
“‘TPC found that the Framework would boost the economy in the short-run as people spend some of their increased after-tax income and businesses increase investment, temporarily raising output relative to its potential level,’ Howard Gleckman, a senior fellow at the Center, wrote in a blog post. ‘However, over time the tax cuts — and the increased deficits they produce — squeeze the overall supply of capital, raise the cost of borrowing, and lower firms' level of investment. The smaller capital stock also diminishes wage growth, which in turn reduces labor supply.’”
“The study by the nonpartisan Tax Policy Center runs counter to White House estimates.”
“‘TPC found that the Framework would boost the economy in the short-run as people spend some of their increased after-tax income and businesses increase investment, temporarily raising output relative to its potential level,’ Howard Gleckman, a senior fellow at the Center, wrote in a blog post. ‘However, over time the tax cuts — and the increased deficits they produce — squeeze the overall supply of capital, raise the cost of borrowing, and lower firms' level of investment. The smaller capital stock also diminishes wage growth, which in turn reduces labor supply.’”