Tuesday, August 7, 2012
There is widespread recognition that the U.S. income tax is a complex, highly inefficient, and costly way of raising revenues to finance government expenditures. In this paper, I analyze a rough sketch of the Romney Tax Plan -- a rate-reducing, base-broadening tax reform. The simulations show that such a base-broadening, rate-reducing reform would have significant positive economic effects on the U.S. economy, including increases in investment, the capital stock, employment, and real wages. These gains are in addition to increases in GDP, investment, consumption, and employment that will occur as the U.S. economy continues to recover from the recent recession and as the population grows. Specifically, I find that the reform would, if passed immediately, increase GDP relative to baseline by 5.4 percentage points over the next decade, while creating 6.8 million jobs.
- R. Glenn Hubbard (Columbia University), N. Gregory Mankiw (Harvard University), John B. Taylor (Stanford University) & Kevin A. Hassett (AEI), The Romney Program for Economic Recovery, Growth, and Jobs
- Huffington Post, Mitt Romney Economic Advisers Draft White Paper To Back Up Job Creation Predictions
- Washington Post, Romney Has a New Economic White Paper. Here’s What He Left Out