This US survey examines (a) US GDP is substantially higher now as a result of the passage of the TCJA than it would have been had the TCJA not been passed, and all else was equal; (b) Corporate capital stock is substantially higher now as a result of the passage of the TCJA than it would have been had the TCJA not been passed, and all else was equal; (c) Real median wages are substantially higher now as a result of the passage of the TCJA than they would have been had the TCJA not been passed, and all else was equal; (d) Federal tax revenues are substantially lower now as a result of the passage of the TCJA than they would have been had the TCJA not been passed, and all else was equal; (e) Charitable donations are substantially lower now as a result of the passage of the TCJA than they would have been had the TCJA not been passed, and all else was equal.
Keyword: tax reform
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This week's US Economic Experts Panel statements:
A) Restoring the top individual federal income tax rate to 39.6% for incomes over $400,000 (from the current 37%) and taxing the capital gains and dividends of taxpayers with income over $1 million at that top rate (instead of the current preferential rate of 20%), with no other associated changes in taxes or spending, would be unlikely to hurt economic growth noticeably.
B) Restoring the top tax rate, removing the preferential rate on capital gains and dividends, and raising the corporate tax rate from 21% to 28%, with no other associated changes in taxes or spending, would be likely to lead to a meaningful sustained reduction in fiscal deficits.
This week's IGM Economic Experts Panel Statement:
Historical experience suggests that raising the top federal marginal tax on personal income to 70% (and holding the rest of the current tax code fixed) would raise substantially more revenue (federal and state, combined) without lowering economic activity.
This week’s IGM European Economic Experts Panel statements:The European Commission has proposed new rules to ensure that “digital business activities are taxed in a fair and growth-friendly way in the EU”. Consider two statements regarding this proposal: An EU-wide 3% tax on revenue from digital activities would, on balance, be a good idea.
If the EU decides to tax digital service providers, it would be better — given the difficulties of measuring and verifying digital activity — to tax them on the revenue, rather than the profits, that they generate locally.
This week's IGM European Economic Experts Panel statements:
A) Holding other policies fixed, the average European would be better off if every European country taxed corporate profits at a rate of 20% (based as closely as possible on a common definition of profits).
B) If other policies were held fixed and every European country taxed corporate profits at a common rate of 20%, then reducing that common rate substantially below 20% would make the average European better off.
This week's IGM Economic Experts Panel Statements:
A) If the US enacts a tax bill similar to those currently moving through the House and Senate— and assuming no other changes in tax or spending policy — US GDP will be substantially higher a decade from now than under the status quo.
B) If the US enacts a tax bill similar to those currently moving through the House and Senate— and assuming no other changes in tax or spending policy — the US debt-to-GDP ratio will be substantially higher a decade from now than under the status quo.
This week’s IGM Economic Experts Panel statements:
A) Since 1980, whenever substantial growth effects have been required to make a tax reform plan revenue neutral, the actual outcome has invariably been a fall in tax revenue as a share of GDP.
B) The tax reform plan proposed by President Trump this week would likely pay for itself through higher economic growth.
This week’s IGM Economic Experts Panel statement:
Reducing the income-tax deductibility of charitable gifts is a less distortionary way to raise new revenue than raising the same amount of revenue through a proportional increase in all marginal tax rates.
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