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.