Skip to content
Matrix Global Advisors
Matrix Global Advisors
  • Home
  • About
  • News
  • Our Work
  • Contact
  • Home
  • About
  • News
  • Our Work
  • Contact
Nov212017
Op-Eds

How Much Economic Growth Can Tax Reform Deliver? Part III

Alex Brill | AEIdeas

I believe that the current US tax code imposes drag on US economic growth and alternatives to the current system could result in an increase in the capital stock, a boost in worker productivity, and thus an increase in wages. This positive economic result would occur slowly over time as new investment is deployed and workers adopt to new opportunities.

Key to realizing this opportunity is a reduction in the tax burden on new investment. Conversely, affording taxpayers a windfall gain on old investments should, to the extent possible, be avoided. As I’ve noted previously, certain transition costs associated with tax reform can be deficit financed; the long-run deficit impact — including consideration of the potential macro-dynamic effects — should be budget neutral. In other words, to promote growth, tax reform should be constructed in a manner that does not lead to excessive crowding out of private investment with new public borrowing.

Done right, effective tax reform will add multiple tenths of a percentage point to the real GDP growth rate for a decade or more until the transition to a new, higher level of output is reached. Once the transition is complete, US economic output could be more than $1 trillion higher every year thereafter.

Read Here

November 21, 2017Category: Op-Eds

Post navigation

PreviousPrevious post:Opportunities for Tax Reform: Remarks From House Committee on Ways and Means Chairman Kevin Brady (R-TX)NextNext post:Relax, the Housing Market will be Fine After Tax Reform
  • Analysis(27)
  • Books(2)
  • Events(13)
  • Interviews(33)
  • News(43)
  • Op-Eds(59)
  • Press Releases(2)
  • Testimony(18)
  • Almost-Speaker McCarthy
    November 23, 2020
  • Nursing Homes Prepare for Third COVID-19 Surge
    October 26, 2020
  • Impact of the Coronavirus Pandemic on Red, Blue, and Swing States
    October 20, 2020
  • Trump Roils Markets with Conflicting Statements on Pandemic Relief
    October 7, 2020

Website Design and Developed by DreamBig Creative