Now that we have a final bill rather than a mere “agreement in principle,” let’s step back and consider some implications of tax reform.
There are three reasons to be pleased and one reason to worry.
Win: Less-destructive federal tax code
There are several provisions of the tax bill that will boost the economy, most notably dropping the federal corporate tax rate from 35 percent to 21 percent. Slightly lower individual tax rates will also help growth, as will provisions such as the expanded death tax exemption and the mitigation of the alternative minimum tax.
How much faster will the economy perform? There are several estimates, with microeconomic-based models predicting better outcomes that Keynesian-based models. Here are some findings from two market-based models.
From the Tax Foundation:
…we estimate that the plan would increase long-run GDP by 1.7 percent. The larger economy would translate into 1.5 percent…
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