Question

How might the 2016 House Republican Tax Reform Plan affect the national economy from the approach of interventionist?

Answer 1

The 2016 House Republican tax reform plan would increase the long-run size of the economy by 9.1 percent (table). The larger economy would result in 7.7 percent higher wages and a 28.3 percent larger capital stock. The plan would also result in 1.7 million more full-time equivalent jobs.

The larger economy and higher wages are due chiefly to the significantly lower cost of capital under the proposal, which is due to the lower corporate income tax rate and the full expensing of capital investment.

GDP	9.10%
Capital Investment	28.30%
Wage Rate	7.70%
Full-time Equivalent Jobs (in thousands)	1,687

Source: Tax Foundation Taxes and Growth Model, March 2016