Donald Trump’s new tax plan got another passing grade Tuesday when the Tax Foundation released their analysis showing that it would increases wages, add jobs, boost the gross domestic product and give all workers more after-tax money.
“Donald Trump’s tax plan would enact a number of tax reforms that would both lower marginal tax rates on workers and significantly reduce the cost of capital. These changes in the incentives to work and invest would increase the U.S. economy’s size in the long run, leading to higher incomes for taxpayers at all income levels,” said Tax Foundation Economist Alan Cole.
But it would come at a price, he added. “The plan would also be a large tax cut, which would increase the federal government’s deficit by over $10 trillion, both on a static and dynamic basis.”
Donald Trump at a recent Capitol Hill rally. Photo by Graeme Jennings
Key findings from the Tax Foundation analysis:
— Trump’s plan would substantially lower individual income taxes and the corporate income tax and eliminate a number of complex features in the current tax code.
— It would cut taxes by $11.98 trillion over the next decade on a static basis. However, the plan would end up reducing tax revenues by $10.14 trillion over the next decade when accounting for economic growth from increases in the supply of labor and capital.
— The plan would also result in increased outlays due to higher interest on the debt, creating a ten-year deficit somewhat larger than the estimates above.
— According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly reduce marginal tax rates and the cost of capital, which would lead to an 11 percent higher GDP over the long term provided that the tax cut could be appropriately financed.
— The plan would lead to a 29 percent larger capital stock, 6.5 percent higher wages, and 5.3 million more full-time equivalent jobs.
— The plan would cut taxes and lead to higher after-tax incomes for taxpayers at all levels of income.
Paul Bedard, the Washington Examiner’s “Washington Secrets” columnist, can be contacted at [email protected].
