DALLAS (Dec. 21, 2020) – A new study of the 2017 federal tax cuts has found that, although controversial when adopted, the tax reform law will lead to lower taxes and higher wages as the average Georgia household will enjoy more than $39,000 in economic benefits over their lifetime.
That’s the conclusion of a new study by Boston University professor Laurence Kotlikoff and funded by the Goodman Institute for Public Policy Research. An earlier study by Kotlikoff and economists at the Federal Reserve Bank of Atlanta estimated the gain at $22,676 because of personal income tax cuts. The new study adds the impact of lower corporate taxes.
At the time of its passage, opponents claimed tax reform would only benefit the rich, and some Democrats urged repeal of the bill. However, Kotlikoff and his colleagues found that all income groups are benefiting from the legislation – roughly in the same proportion.
“Right now, during the coronavirus crisis, this is welcome news to many Georgia families,” said John Goodman, President of the Goodman Institute for Public Policy Research.
Goodman said lower corporate tax rates attract capital from abroad, raise wages and create greater economic expansion in Georgia and in other states.
“We used to have one of the highest corporate tax rates in the world,” Goodman said. “High corporate taxes drive capital offshore and that’s bad for American workers. With the lower rates we have now, we are more competitive.”
President-elect Joe Biden is proposing to undo half of the 2017 corporate tax cuts, raising the top rate from 21 percent to 28 percent. During the Democratic primary, Biden’s running mate, U.S. Sen. Kamala Harris, proposed to repeal the previous corporate tax cuts entirely – pushing the top rate back to its original 35 percent.
“The corporate tax cut alone is worth almost $16,000 in lifetime income to the average Georgia household,” says Goodman. “If Joe Biden’s proposal is adopted, Georgians would lose half that amount. If Kamala Harris gets her way, Georgians would lose all of it.”
The study shows that many Georgians would be better off in the short run if the Biden economic plan were adopted in full. That’s because of Biden’s proposal for a more generous child tax credit and more generous benefits for low-income seniors. There are long run costs, however. “When today’s children become adults, their wages will be lower and the economy will be less prosperous because of the way these benefits are funded,” Goodman says.
The new analysis of the 2017 tax plan may be found here: https://kotlikoff.net/wp-content/uploads/2020/12/Georgians-Stake-in-Biden-Reforms.pdf
The tax reform provisions of the TCJA affecting business may be found here: https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-a-comparison-for-businesses
Provisions affecting individuals and families may be found here:
For more information on the analysis of the Biden tax plan or to speak with John Goodman of the Goodman Institute for Public Policy, contact: Susan Meyers at 404-518-2271 or firstname.lastname@example.org