Republican tax plan would spur growth, add to deficit, new study shows
(WASHINGTON) — The tax plan advanced by House Republicans last week will spur economic growth, but still add more than $1 trillion to the deficit, according to a new study released Monday.
The macroeconomic analysis from the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute, finds that the Tax Cuts and Jobs Act would boost economic output by .6 percent of gross domestic product in 2018, and .3 percent in a decade.
The economic growth would provide $169 billion in additional tax revenue for the federal government over the next decade, according to the analysis. The entire tax package is expected to add $1.4 trillion to the deficit over the same period of time.
The White House and congressional Republicans, who have criticized the Tax Policy Center’s findings in the past, have said passing the plan will spur economic growth that will offset the tax cuts in the package.
The TPC had to revise its initial analysis of the House plan over a computing error.
The House plan will not make it to President Donald Trump’s desk unchanged: Senate Republicans will vote next week on their own version of the tax bill, which will then be reconciled with the House-passed proposal.
While Senate Republicans and the White House also support repealing Obamacare’s individual health insurance mandate as part of the plan, White House budget director Mick Mulvaney said Sunday that Trump could also forego the mandate repeal to help the proposal clear the House and Senate.
“If a good tax bill can pass with that Obamacare mandate repeal as part of it, great. If it needs to come out in order for that good tax bill to pass, we can live with that as well,” Mulvaney said in an interview with CBS News’ “Face the Nation.”
In a separate study released Monday, the Tax Policy Center found that the Senate proposal would reduce taxes on average for all income groups in 2019 and 2025.
Roughly 10 percent of taxpayers would pay higher taxes compared to current law under the proposal in 2019, a number that would rise to 50 percent in 2027, according to the analysis.
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