by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Aparna Mathur of the American Enterprise Institute likes much of what she sees in the latest Republican tax reform plan. She explains in a recent column that one element of the plan generates concern.
While the cut in the corporate rate is being viewed as a giveaway to the wealthy, research suggests that the real winners might be working class families in America, as American businesses expand and grow their productive investments in the U.S.
While I am optimistic about the long-run effects of moving toward a more competitive corporate tax code, it behooves us to proceed with caution. The biggest concern with the plan is its potential to add significantly to deficits and the federal debt.
According to initial rough estimates from the Committee for a Responsible Federal Budget, while the tax cuts will cost over $5.8 trillion, the base-broadening measures will recover much less than that, resulting in $2.2 trillion in net tax cuts.
If the plan adds to the federal debt in the short run, this has the potential to become a drag on economic growth in the long-run. …
… Overall, the tax plan has no obvious losers and potentially many winners, with the obvious caveat that we need to be cautious about the impact on the country’s fiscal stability as we move forward with this approach.