I am Pamela Villarreal, Senior Fellow at the National Center for Policy Analysis. The current tax system is drain on the national economy. Besides the billions of dollars spent a year on compliance, the marginal rates on both individuals and corporations disincentive productive activities — such as working, saving and investing. Although the right and the left may not agree on specific reforms, they generally agree that there are too many loopholes, but if the tax system were simpler, broad-based and less punitive there would be no need for loopholes.
Using a dynamic model that is exclusive to NCPA, senior fellow Dr. David Tuerck, president of Beacon Hill Institute, and his team have modeled the effects of tax reform on the economy. Using the second version of the Trump tax plan (or Trump 2.0), Tuerck and his team found that if tax reform via the Trump plan were implemented in 2017, it would increase private sector jobs by 3 million. Trump’s plan would also promote other economic growth effects:
- In the first year (2017), real GDP would increase $985 billion, representing a growth rate of 5.64 percent above Congressional Budget Office baseline estimates.
- In 2026, this growth rate would increase to 9.36 percent.
- Personal income in 2017 would be $646 billion more than CBO baseline estimates, a growth rate of 3.83 percent.
- In 2026, this growth rate would increase to 5.64 percent.
- Business investment would increase by $191 billion in 2017, representing a 7.16 percent growth rate.
- In 2026, this would increase to a substantial 11.72 percent above CBO baseline estimates.