Question

Evaluate how the 2016 House Republican Tax Reform Plan might affect the federal deficit or debt.

Answer 1

The house Republican tax Reform Plan would reform the individual tax base of the country. The tax reform plans to reduce the marginal tax rate and cost of capital. The evaluation shows that the plan would reduce the federal revenue over the first decade. However, in the subsequent years the plan will cost much less. Thus, it can be stated that the 2016 House Republican Tax Reform Plan will lead to increase in federal deficit or debt in the first few years but in the later years will lead to fall in the debt when the cost of the plan will decline.