The final Republican tax bill set for a House vote reportedly will boost gross domestic product by 1.7 percent, lift wages by 1.5 percent, and add 339,000 full-time jobs to the economy.
The Tax Foundation analyzed the details of the final bill and said it is a pro-growth plan that will increase revenues by roughly $600 billion from expected economic growth, reducing the cost of the bill, the Free Beacon reported.
The foundation says the bill, as it is written now, is expected to increase capital stock by 4.8 percent and long-run GDP by 1.7 percent, add 399,000 full-time jobs, and boost wages by 1.5 percent. The analysis says GDP could be higher in 2018, increasing to 2.45 percent, which is higher than the baseline growth of 2.01 percent.
The Tax Foundation report notes that if the plan were made permanent, there would be greater economic effects, but there would also be higher costs.
"If the entire plan were enacted permanently, it would increase long-run GDP by 4.7 percent, raise wages by 3.3 percent and create 1.6 million new full-time equivalent jobs," the report states. "However, the long-run cost of the bill would be $2.7 trillion on a static basis."
The bill also would add $448 billion to federal deficits over 10 years with economic growth factored in, Bloomberg reported.
The estimate is far lower than the $1 trillion deficit increases Congress’s official scorekeeper estimated for the House and Senate bills after accounting for economic growth. A Joint Committee on Taxation macroeconomic analysis of the final bill has not yet been released.
The new estimate could allow Republicans to argue that the tax bill would pay for itself. That’s because the revenue baseline that scorekeepers, including the Tax Foundation, use assumes that Congress would let several existing tax breaks that are already set to expire go off the books -- a so-called current-law baseline, Bloomberg reported.
But Congress tends to extend such expiring breaks regularly. So, using a more realistic “current-policy” baseline -- that is, assuming that $460 billion in expiring tax breaks would be renewed -- would make the bill revenue-neutral against a lower baseline number, Bloomberg reported.
The current-policy argument might create a new issue, however: The bill’s individual tax cuts are set to expire after 2025, but Republicans have said that they’ll be so popular, they’ll be extended by a future Congress. If that’s the “policy,” then the effect of extending the tax cuts might have to factor into a current-policy assumption as well, Bloomberg reported.
(Newsmax wire services contributed to this report).
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