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WorthyNews: Report: GOP Tax Framework Could Raise GDP By 5%, Wages By 7%


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(Worthy News) - President Donald Trump's tax reform framework could raise GDP by as much as 5 percent and wages by as much as 7 percent, according to a new study from Boston University economists.

"We find that, depending on the year considered, the new Republican tax plan raises GDP by between 3 and 5 percent and real wages by between 4 and 7 percent," the economists explain. "This translates into roughly $3,500 annually more annual real take-home pay for the average American household."

Economists believe this growth can happen due to the plan's aim to reduce the marginal effective corporate tax rate from 34.6 percent to 18.6 percent, which they believe will grow the capital stock by 12 to 20 percent. [ Source: Washington Free Beacon (Read More...) ]

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Seems to be a well done analysis following fairly standard economic modeling.

A few interesting tidbit in the conclusion section.

Third, the model assumes agents are rational, forward looking, and face no uncertainty. The GGM also models firms as perfectly competitive

I realize for the sake of modeling this has to be done this way, but it did make me laugh.  What in our country is "rational, forward looking and has no uncertainty"?    

I found this conclusion very interesting as well...

The UF tax reform, while roughly half as good as the Better Way plan, appears worth enacting. But we are concerned that the UF’s personal tax provisions will disproportionately help the top 1 percent. Moreover, revenue neutrality is hardly a desideratum in an economy like ours that has a massive long-term fiscal gap. Hence, we would encourage Congress to modify the Unified Framework tax plan in ways that reduce the apparent redistribution to the rich and that produce addition revenue

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