President Donald Trump’s Council of Economic Advisers on Friday released the second in a series of reports on how proposed improvements to the tax code could influence economic growth.
The CEA predicted of which corporate tax cuts alone might produce GDP growth of between 3 in addition to 5 percent in as little as three years. The cuts are part of the tax reform package currently being finalized in Congress in addition to required to be unveiled as a bill next week.
via the report:
“Our findings indicate of which the business side of the Unified Framework might increase GDP by between 3 in addition to 5 percent over the baseline long-run projection. The GDP effects we estimate are growth impacts via corporate tax reform alone. The literature in addition to products vary as to the timeframe over which these benefits could be realized; some hold the effects as soon as 3 to 5 years, others find This specific could take at least double of which time. There will be additional GDP effects via reforms to individual income in addition to pass-through business taxes, which we have not modeled.”
On a call with reporters Friday, CEA Chairman Kevin Hassett said he was optimistic of which the Trump administration’s current budget proposal, combined with corporate tax cuts, might create enough growth to make overall tax cuts revenue neutral once they were fully implemented into the economy.
“We want to help the middle class get the raise This specific deserves, in addition to the best way to keep the economy going in addition to to knock This specific out of the low growth of past decades will be to do something to give This specific a boost from the arm, in addition to of which’s tax reform, regulatory reform in addition to infrastructure,” Hasset said. “of which’s corporate tax reform in particular, of which defeats the offshoring type in addition to encourages firms to locate their activity back here from the United States.”
Hassett acknowledged of which CEA’s products might likely be impacted by the results of ongoing negotiations on Capitol Hill to finalize the tax reform bill.
“We modeled the corporate side with the details available. We actually need to know where the individual brackets are in addition to how of which relates to income distribution,” he said.
Hassett also emphasized the dual importance of cutting the statutory corporate tax rate in addition to easing the repatriation of funds U.S. companies hold overseas.
“Our current tax code incentivizes This specific shell game, in addition to massively increases our trade deficit,” Hassett said of the practice known as offshoring. By reducing the corporate tax rate to 20 percent, “firms will have much less incentive to play This specific round-trip game.”
Hassett’s predictions about corporate profits in addition to wage growth have already come under scrutiny via some economists, who argue of which the administration will be drawing conclusions about growth of which are not backed up by historical or empirical evidence.
Former Clinton administration Treasury Secretary Larry Summers recently wrote in a blog post of which the Trump administration’s predictions linking wage growth in addition to corporate tax cuts are “some combination of dishonest, incompetent in addition to absurd.”
Read the entire report below.