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Brief

Macroeconomic Analysis of Former Vice President Biden's Tax Proposals

Benjamin R. Page, Jeffrey Rohaly, Thornton Matheson, Gordon B. Mermin, Jason DeBacker, Richard Evans
July 21, 2021
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Abstract

NOTE: This is an updated version of the analysis published November 10, 2020.1

The Tax Policy Center (TPC) has analyzed the macroeconomic effects of the tax proposals that President Joe Biden advanced during his 2020 presidential campaign. We find the tax proposals would boost US gross domestic product (GDP) by about 0.2 to 0.3 percent in 2021, reduce GDP by about 0.4 to 0.5 percent, on average, over 2022-2030, and increase GDP by small amounts by 2040. The resulting net decrease in economic output over the first decade would reduce the net revenue generated from the proposals by about $161 to $419 billion from 2021 to 2030 (about 8 to 20 percent of the 10-year total). In the following decade, macroeconomic feedback on output would reduce the net revenue increase by $90 to $762 billion. Biden’s spending proposals would also have important effects on the overall economy, but TPC has not estimated those.

1 This version incorporates additional estimates of the economic and revenue effects of Biden’s tax proposals using the OG-USA overlapping generations model. These estimates maintain the same baseline economic assumptions as in the original analysis.

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Business Taxes Campaigns, Proposals, and Reforms Federal Budget and Economy Individual Taxes
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Meet the Experts

  • Benjamin R. Page
    Senior Fellow
  • Jeffrey Rohaly
    Principal Research Associate
  • Thornton Matheson
    Senior Fellow
  • Gordon B. Mermin
    Principal Research Associate
  • Jason DeBacker
  • Richard Evans
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  • © Urban Institute, Brookings Institution, and individual authors, 2022.