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Independent Economists Agree: Tax Reform Results in Stronger Economic Growth, More Jobs, and Higher Wages
Since Chairman Camp released the Tax Reform Act of 2014, four different analyses by independent economists have all shown that it will result in significantly stronger economic growth. Analysis by the non-partisan Joint Committee on Taxation (JCT, the official Congressional scorekeeper) found that the proposal would increase GDP growth by $3.4 trillion and result in an additional 1.8 million private sector jobs over the next ten years. Based on this data, the Committee estimates tax reform will put an additional $1,300 a year in the pockets of the average middle-class family.
Analysis by independent economists from the American Action Forum (AAF), the Heritage Foundation (Heritage), and Rice University (Rice) have found the proposal would result in even stronger economic growth than the JCT analysis found.
More Jobs & Higher Wages
JCT estimates that the proposal will create up to 1.8 million new private sector jobs over the next ten years, but this represents the low end of all the estimates. The AAF analysis predicts the proposal could result in 5 million new jobs over the same period. Analysis by Heritage shows average annual increases of more than 500,000 new private sector jobs over the next ten years.
Based on analysis using JCT data, the proposal would result in an additional $1,300 a year in income for the average American family. Analysis by Heritage projects after-tax income to increase by as much as 2.3 percent over the next decade. The Rice analysis projects an increase of up to 3.8 percent.
A Stronger Economy
The increase in jobs and wages projected by all the analyses is driven by stronger economic growth. Each of these analyses project that the proposal with generate faster growth in the Gross Domestic Product (GDP). JCT estimates GDP to increase by as much as 1.6 percent over the next ten years or $3.4 trillion by 2024. Rice projects an increase of 2.2 percent in GDP growth over the next decade. The Heritage analysis projects as much as 2.9 percent in additional GDP growth because of the proposal, and the AAF analysis projects as much as 5 percent additional GDP growth over the long term.
More Pro-Growth Policies Possible
More Americans working and earning larger paychecks means more economic growth that generates more tax revenue without increasing taxes. The analyses project that as a result of stronger economic growth, revenue to the federal government will increase significantly. JCT projects as much as $700 billion in additional revenue from growth. AAF projects revenue growth could reach $1.5 trillion. This additional revenue gives policy makers more options and more flexibility to enact further reforms that could result in even more economic growth without increasing the federal deficit or debt.