Originally posted at The Wall Street Journal, November 2017.
The usual assessments fail to account for the way liabilities change over a taxpayer’s lifetime.
The GOP tax plan should do three things. It should expand the economy while raising wages. It should pay for itself. And it should be fair.
The new plan’s business-tax provisions will reduce the effective marginal tax rate on U.S. investments dramatically, from close to 35% to under 19%. Depending on the year in question, my global dynamic macroeconomic model predicts a 12% to 20% expansion in the U.S. capital stock, producing an average $3,500 real wage increase for each American working household. Moreover, economic growth…