Macroeconomic effects only modestly change TPC revenue estimates of the candidates’ tax plans. Hillary Clinton’s plan would slow the economy in the short run but improve it in the long term. Overall, after considering these macro effects, it would generate about 7 percent less revenue (about $95 billion) over the 2017-2026 period than under traditional scoring. By contrast, Donald Trump’s plan would boost the economy in the short-term but slow it in the long-run. It would lose only about 3 percent less revenue (or about $178 billion) in the first 10 years. The macroeconomic effects are modest because the plans’ impacts on incentives to work, save, and invest would be largely offset by their effects on the deficit. These effects were studied by TPC and the Penn-Wharton Budget Model.
How would candidates’ spending plans affect economic growth? TPC’s Len Burman explains. “Once you consider the magnitude of Clinton’s spending proposals, her fiscal plan would slow the economy in the long run…. Trump’s… overall tax-and-spending plan would still significantly harm the economy over the long run by driving up deficits that would crowd out private investment.”
Do budget deficits matter to the candidates? TPC’s Howard Gleckman says “Donald Trump and his policy proposals argue strongly that they do not while Hillary Clinton appears to believe that they do—sort of…. Clinton seems worried enough about deficits to carefully calibrate her tax and spending plans to avoid adding to the debt, though she would do nothing to reduce it. Trump appears comfortable with a fiscal plan that would, according to standard economic analysis, sharply increase the debt.”
Updated by TPC: Options for Child Tax Credit reform. A new brief by TPC’s Elaine Maag and Elena Ramirez analyzes seven options for reforming the Child Tax Credit that would either make the CTC more consistent with other parts of the tax code, target additional benefits to young children, or broadly increase the credit for most current recipients.
How does the Earned Income Tax Credit favor families with children? New TPC estimates show that workers with children, no matter their marital status, benefit much more from the EITC than those without. A single worker with two children and earnings at the federal poverty guideline receives over $5,000 from the EITC, while a worker without children at the same earnings level receives only $225.
State tax commissions and tax reform. Determining how and from whom to collect state tax revenue means considering equity, fairness, efficiency, and simplicity—no easy task. States often rely on special tax commissions before attempting major tax reform. Richard Auxier’s new TPC brief examines 16 years of these panels: Who establishes them, who serves on them, who advises them, and whether their recommendations lead to changes in state tax policy.
And… State tax commissions and economic development. Richard also takes a look at how state tax commissions. The panels, while often tasked with improving economic development, also contain little exploration or explanation of how taxes and economic development relate to one another. That’s a shame: Most commissions thoroughly investigate their state’s tax structure, often with the assistance of respected tax and budget experts.
In the United Kingdom: A 10 percent corporate tax rate? The Sunday Times reports Britain could cut its corporate tax from 20 to 10 percent without a post-Brexit free trade deal with the European Union, or if the EU limits market access by British banks. A tax cut might persuade the EU to grant those banks "passporting" rights to continue to operate across the EU.
Ireland may have a hard tax negotiation ahead, too. The European Commission will propose legislation for a common consolidated corporate tax base (CCCTB) this week. This could leave Ireland alone in its fight to maintain its low corporate tax rate.The CCCTB is designed to curb corporate tax avoidance of the kind Apple may have enjoyed thanks to its tax treatment in Ireland.
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