Taxes

Analysis: The Final GOP Tax Bill Might Be Worse

JM Ashby
Written by JM Ashby

Now that we know what the final GOP tax bill is going to look like, it's time for another round of analysis from various think tanks and scorekeepers.

Rather than cite liberal or even non-partisan analysis first, we can go straight to a conservative analysis which does not paint a pretty picture for average Americans.

The conservative Tax Foundation says the GOP bill will increase wages by just 1.5 percent and create virtually no jobs.

According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 1.7 percent increase in GDP over the long term, 1.5 percent higher wages, and an additional 339,000 full-time equivalent jobs. [...]

Over the next decade, the Tax Cuts and Jobs Act would increase GDP by an average of 0.29 percent per year; GDP growth would be, on average, 2.13 percent, compared to 1.84 percent. In 2018, GDP growth would be 0.44 percent over the baseline forecast.

339,000 jobs sounds like a lot, but that's not per month or even per year; that's over ten years. Likewise, that's a 1.5 percent increase in wages over ten years. These are such small numbers as to be virtually nonexistent.

The economy typically ads anywhere between 100 to 250,000 jobs per month right now under current law. Adding 339,000 over 10 years boils down to a little over 2,800 per month. And we haven't even considered that the possibility that future economic disruption caused by this bill and other Trump policies (like withdrawing from NAFTA) will lead to far more job losses.

Meanwhile, the non-partisan Committee for a Responsible Federal Budget says the GOP tax bill will increase deficits by up to $1.7 trillion even if you include magic asterisks for growth.

The final conference committee agreement of the Tax Cuts and Jobs Act (TCJA) would cost $1.46 trillion under conventional scoring and over $1 trillion on a dynamic basis over ten years, leading debt to rise to between 95 percent and 98 percent of Gross Domestic Product (GDP) by 2027 (compared to 91 percent under current law). However, the bill also includes a number of expirations and long-delayed tax hikes meant to reduce the official cost of the bill. These expirations and delays hide $570 billion to $725 billion of potential further costs, which could ultimately increase the cost of the bill to $2.0 trillion to $2.2 trillion (before interest) on a conventional basis or roughly $1.5 trillion to $1.7 trillion on a dynamic basis over a decade. As a result, debt would rise to between 98 percent and 100 percent of GDP by 2027.

These scores are slightly to significantly worse than that we've seen before on the separate House and Senate versions of the bill.

The Republican-controlled House and Senate versions were both terrible so I suppose it only makes sense that the final version combining both would be like Voltron for bad policy.

The only good thing you can say about the final bill is that they removed the disastrous tax hikes on graduate students and renewable energy companies. Some congressmen withheld their support to regain some state and local deductions, but that's not exactly what they got. The final bill will allow residents of high tax states to deduct income or property taxes, but not both.

  • Draxiar

  • muselet

    According to the Tax Foundation, which is predisposed to approve of tax cuts, the Tax Cuts and Jobs Act (for some reason, the Rs didn’t call it the Fuck Off And Die, Peasants! Act) will improve the economy of the United States by … *drum roll* … rounding errors.

    Quite frankly, that’s a better outcome than I’d expected. The analysis is bollocks, though. The legislation will more likely leave a large, smoking crater where the economy used to be. If we’re very lucky, “Eat the Rich!” will remain mere snark.

    How lucky do you feel?

    –alopecia

    • JMAshby

      I cited the conservative example first because that’s suppose to be the good one, and it’s still bad.

  • fry1laurie

    Corker got his cut, so bombs away on the American economy!

  • ninjaf

    Start stuffing the money in the mattress…

    • Badgerite

      It’a only paper, you know, with Munchin’s name on it. ( He was so proud.)
      A chit in a system that will be overloaded with debt. Like Argentina before it had to default in 1998.
      I’m really looking forward to the IMF (International Monetary Fund) telling us what our government spending policies will be when they agree to, maybe, bail us out. Or, more recently, like Greece and the EU.

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