Nov 28, 2017

Experts Agree: Tax Reform Will Grow the Economy & Make America Competitive Again

Post by Freedom Partners

Economic experts, pundits, and editorial boards agree that the best way to grow the economy and make the United States competitive again on a global stage is through pro-growth tax reform that lowers rates and delivers a simpler, fairer tax code that treats everyone equally. As Congress continues work on tax reform legislation, it’s important not to lose sight of what success could mean for Americans looking for more jobs, higher wages, and the greater financial security that would come from sustained, robust economic growth.

Tax Overhaul Built To Lure Jobs & Investment Back To The United States

The Irish Times Headline: “American Tax Overhaul Has Worrying Implications For Ireland.” (“American Tax Overhaul Has Worrying Implications For Ireland,” The Irish Times, 11/18/17)

  • The 20% Corporate Tax Rate, Which Both The Senate And House Agree On, Would Make The United States “The Most Competitive Place In The World” Which Would Be Worrisome For Countries Like Ireland And Many Others Around The Globe. “Although many of the negotiations as Republicans merge the House and Senate plans will be about the changes to individual tax arrangements, such as the Senate’s proposal to abolish the Obamacare requirement for all Americans to hold health insurance, most in the party are united behind reforming the corporate-tax system (although the Senate’s proposal to delay the implementation of a 20 per cent corporate-tax rate for another year is likely to be a point of contention). This is unsettling for Ireland. Addressing the House this week, Paul Ryan – a proud Irish-American – cited the example of Johnson Controls, a company that has had roots in his home state of Wisconsin since the 1880s but is now based in Ireland. The new tax system will help make the United States “the most competitive place in the world”, he said. Worrying words for Ireland.” (“American Tax Overhaul Has Worrying Implications For Ireland,” The Irish Times, 11/18/17)

AT&T Press Release: “AT&T To Invest An Additional $1 Billion In The United States If Competitive Tax Rate Enacted.” (Press Release, “AT&T To Invest An Additional $1 Billion In The United States If Competitive Tax Rate Enacted,” AT&T, 11/10/17)

AT&T Chairman And CEO Randall Stephenson: “If The House Bill Is Signed Into Law, We’d Commit To Increase Our Domestic Investment By $1 Billion In The First Year In Which The New Rates Are In Place.” “’By immediately lowering the corporate tax rate to 20%, this bill will stimulate investment, job creation and economic growth in the United States … ‘With a rate of 20% combined with provisions for full expensing of capital expenditures for the next five years, we’re prepared to increase our investment in the United States. If the House bill is signed into law, we’d commit to increase our domestic investment by $1 billion in the first year in which the new rates are in place. And research tells us that every $1 billion in capital invested in telecom creates about 7,000 good jobs for the middle class.’” (Press Release, “AT&T To Invest An Additional $1 Billion In The United States If Competitive Tax Rate Enacted,” AT&T, 11/10/17)

Recent Analysis By Goldman Sachs Shows Tax Reform, Specifically Slashing The Corporate Tax Rate To 20%, Would Allow American Companies To Bring An Estimated $2.5 Trillion Back Home While Growing Earnings By A Projected 14%. “Under the Republican plan making its way through Congress, the corporate tax rate will get slashed from a highest-in-the-developed-world 35 percent to 20 percent and companies will be able to bring back the $2.5 trillion they have stashed overseas at sharply lower rates. … Under the projections, earnings will grow 14 percent in 2018 and 5 percent the following year.” (Jeff Cox, “Suddenly Bullish Goldman Sees A Big 2018 For Stocks Due To ‘Rational Exuberance’,” CNBC, 11/21/17)

Goldman Sachs Analysis Shows Tax Reform Would Drive The Market With The S&P Hitting 2,850 In 2018, A 10% Gain From Current Levels, While Failing To Enact Tax Reform Will Cause The Market To Fall By 5%. “With tax reform, Goldman Sachs thinks the S&P 500 will hit 2,850 in 2018, a more than 10 percent gain from current levels. However, if Congress fails to act, Goldman sees the stock market index falling 5 percent. (Jeff Cox, “Suddenly Bullish Goldman Sees A Big 2018 For Stocks Due To ‘Rational Exuberance’,” CNBC, 11/21/17)

Economic Experts & Pundits: Pro-Growth Tax Refrom Plan Will Re-energize The Economy, Make Businesses More Competitive & Help The Middle Class

CNBC Headline: “Kudlow: Trump Has An Incentive-Packed Tax Plan Like JFK And Reagan.” (Larry Kudlow, “Kudlow: Trump Has An Incentive-Packed Tax Plan Like JFK And Reagan Push,” CNBC, 10/1/17)

  • Larry Kudlow: “It Puts More Cash In Worker’s Pockets, Simplifies The Code, And Means That Near 80 Percent Of Taxpayers Won’t Have Any Deductions.” “Taken together, this plan contains a mountain of incentives. On the individual side, the sleeper tax detail is the doubling of the standard deduction. As my CNBC colleague Jake Novak points out, this is a huge positive for young millennials (who don’t own much) and folks with no mortgages or homes. It puts more cash in worker’s pockets, simplifies the code, and means that near 80 percent of taxpayers won’t have any deductions.” (Larry Kudlow, “Kudlow: Trump Has An Incentive-Packed Tax Plan Like JFK And Reagan Push,” CNBC, 10/1/17)

Kudlow: “Rather Than Punish Investment, The Trump Plan Will Spur Growth Across The Board. Everyone Will Benefit.” (Larry Kudlow, “Kudlow: Trump Has An Incentive-Packed Tax Plan Like JFK And Reagan Push,” CNBC, 10/1/17)

Huffington Post Headline: “Realistic Tax Reform Can Deliver Real Growth.” (Douglas Holtz-Eakin, “Realistic Tax Reform Can Deliver Real Growth,” Huffington Post, 11/10/17)

  • American Action Forum President Douglas Holtz-Eakin: “Sound Policy Reforms, Beginning With Tax Reform, Are Essential To Changing This Outlook – Delivering Higher Growth, Better Wages For Workers, And A Higher Standard Of Living For Americans.” “In its latest projections, the Congressional Budget Office estimates that the U.S. economy will grow at a pace of about 1.9 percent a year for the next decade. At this rate, the American Dream would remain out of reach for many. Indeed, the most recent comprehensive income survey conducted by the U.S. Census Bureau found that income gains for households with full-time, full-year workers was precisely zero – this despite being over 8 years into the recovery from the Great Recession. Sound policy reforms, beginning with tax reform, are essential to changing this outlook – delivering higher growth, better wages for workers, and a higher standard of living for Americans.” (Douglas Holtz-Eakin, “Realistic Tax Reform Can Deliver Real Growth,” Huffington Post, 11/10/17)

Harvard Business School Economist Mihir A. Desai: “This Will Make The United States A Better Place To Invest And A Better Place To Be Headquartered In.” (Patricia Cohen, “A Tax Cut That Lifts the Economy? Opinions Are Split,” CNBC, 11/2/17)

National Review Headline: “A Pro-Growth Tax Bill Is On The Way.” (Larry Kudlow, “A Pro-Growth Tax Bill Is On The Way,” National Review, 11/10/17)

Kudlow: “Let Me Make One Thing Clear: Both Plans Are Pro-Growth Where The Economic Power Comes From The Business Side.” (Larry Kudlow, “A Pro-Growth Tax Bill Is On The Way,” National Review, 11/10/17)

  • Kudlow: “The Biggest Beneficiaries Will Be Middle-Class Wage Earners.” “The all-important business tax rate will come down to 20 percent from 35 percent. That’s the key to economic growth. And the biggest beneficiaries will be middle-class wage earners.” (Larry Kudlow, “A Pro-Growth Tax Bill Is On The Way,” National Review, 11/10/17)

American Enterprise Institute Tax Specialists Alan Viard: “Slashing The Rate To 20 Percent Is ‘A Pretty Dramatic Change In The Attractiveness Of The United States Relative To Other Countries.’” (Patricia Cohen, “A Tax Cut That Lifts the Economy? Opinions Are Split,” CNBC, 11/2/17)

CNBC Contributor Jake Novak: “The Trump/GOP Tax Reform Plan Is Out. And It Includes What Could Be The Most Significant Tax Relief In Modern U.S. History For Americans Who Really Need It.” (Larry Kudlow, “Kudlow: Trump Has An Incentive-Packed Tax Plan Like JFK And Reagan Push,” CNBC, 10/1/17)

Leading Economists Argue In Open-Letter To Treasury Secretary How Tax Reform Will Boost Economic Growth. “Would the proposals raise current and future economic activity and generate federal tax revenue that would reduce the ‘static cost’ of the reforms? This letter explains why we believe that the answer to these questions is ‘yes.’” (Barro, Boskin, Cogan, Holtz-Eakin, Hubbard, Lindsey, Rosen, Shultz, and Taylor, “How Tax Reform Will Lift The Economy,” The Wall Street Journal, 11/26/17)

  • Corporate Rate Reduction Would Invite Increased U.S. Investment, Reduce Incentive For U.S. Companies To Shift Profits Abroad. “Another advantage of the corporate rate reduction embodied in the House and Senate Finance bills is that it would lead both U.S. and foreign firms to invest more in the United States. In addition, U.S. multinational firms would face a reduced incentive to shift profits abroad, which would raise federal revenue, all else equal.” (Barro et al., “How Tax Reform Will Lift The Economy,” The Wall Street Journal, 11/26/17)
  • Tax Reforms In Both House and Senate Bills Would Increase Growth, Household Incomes, And Federal Tax Revenue. “You [Treasury Sec. Mnuchin] have consistently stressed that the objective of tax reform should be to enhance prospects for increased economic growth and household incomes. We agree with this objective, which is consistent with the traditional norms of public finance going back to Adam Smith. We believe that the reforms embodied in the House and Senate Finance bills would achieve this objective. The increased growth, in turn, would lead to greater taxable income and federal tax revenues, which would reduce the static cost of lost federal tax revenue from the reform.” (Barro et al., “How Tax Reform Will Lift The Economy,” The Wall Street Journal, 11/26/17)

Editorial Boards: Tax Cuts To Bring Broad Based Economic Growth & Boost Federal Revenue

Investor’s Business Daily Editorial Headline: “The Coming Tax-Cut Boom.” (Editorial, “The Coming Tax-Cut Boom,” Investor’s Business Daily, 11/18/17)

  • Investor’s Business Daily: “The Point Is, These Tax Cuts Will Bring About Broad-Based Economic Gains That Will Affect Americans Across The Board.” (Editorial, “The Coming Tax-Cut Boom,” Investor’s Business Daily, 11/18/17)

The Wall Street Journal Editorial: “The GOP Reforms Would Help The Economy And Make It Harder For Corporations To Avoid Paying Taxes.” “The truth is that it’s a serious attempt to fix a broken U.S. code that has festered for years and made America increasingly uncompetitive as a destination for mobile global capital. The GOP reforms would help the economy and make it harder for corporations to avoid paying taxes.” (Editorial, “Reducing Corporate Tax Games,” The Wall Street Journal, 11/19/17)

The Wall Street Journal Editorial: According To Congressional Budget Office Estimates, Even The Modest Net Tax Cuts Under The GOP Plan Would Produce More Than Enough Economic Revenue To Offset The Deficit: “The actual budget hole is smaller than $1.5 trillion because the GOP budget is scored on a ‘current law’ baseline. This assumes that tax breaks that are ‘current policy’ will expire and more revenue will flow to Treasury. This is worth more than $400 billion over 10 years, which means the budget ‘hole’ is closer to $1 trillion out of the $43 trillion the Congressional Budget Office projects in revenues over the next decade. In other words, this is a modest net tax cut even assuming no additional economic growth.” (Editorial, “Tax Reform, Growth and the Deficit,” The Wall Street Journal, 11/26/17)

  • “A Mere Four Years At 3% Growth—The U.S. Historical Norm—Could Fill A $1 Trillion Hole.” “CBO’s roughly $43 trillion revenue estimate also depends on a projection of average economic growth of 1.9% a year. But the U.S. economy has never grown that slowly for so long. CBO says that every 0.1% increase in GDP adds about $270 billion in revenue over 10 years. That means a mere four years at 3% growth—the U.S. historical norm—could fill a $1 trillion hole. An average growth rate of even 2.4% over the decade would more than fill the hole.” (Editorial, “Tax Reform, Growth and the Deficit,” The Wall Street Journal, 11/26/17)

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