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1 Stephen Entin, The Impact of Romney's Proposed $17,000 Deduction Cap 1 (2012)

handle is hein.taxfoundation/ffddbxz0001 and id is 1 raw text is: October 11, 2012 No. 331 The Impact of Romney's Proposed $17,000 Deduction Cap By Stephen Entin A recent Tax Foundation analysis of Governor Mitt Romney's tax proposals indicated they would add substantially to the GDP over time, raise after-tax incomes across the board, and cost the U.S. Treasury far less than what traditional static estimates (the cost before any economic gains are factored in) have reported.1 Indeed, our model showed that the added income growth from that tax plan would generate sufficient tax revenue to cover about 60 percent of the static budget cost of the tax reductions. Specifically, our model found that reducing individual tax rates would recover only a portion of the static revenue cost through economic growth, but that the proposed reduction in the corporate income tax rate, and lower taxes on capital gains, dividends, and estates would contribute to job growth and federal revenues, reducing the cost of the total tax package. While the remaining revenue shortfall could certainly be closed by eliminating various tax expenditures (or so-called loopholes) on high-income taxpayers, our study also suggested that the budget shortfall could be closed through reasonable cuts in corporate welfare and obsolete and ineffective federal spending programs.2 1Stephen Entin & Will McBride, Simulating the Economic Effects of Romney's Tax Plan, TAX FOUNDATION FISCAL FACT NO. 330 (Oct. 03, 2012), :ttp//taxfoundation. org/articke/simnulatng econmmic -effcts-romneys-ta-7an. 2 In a follow up blog post, we also demonstrate that a natural byproduct of economic growth is reduced spending on recession induced transfer payments such as unemployment benefits, which further reduces the deficit. See William McBride, More on How to Pay for Romney's Tax Cuts, TAX FOUNDATION TAX POLICY BLOG, Oct. 5, 2012, http:/ikaxfoundationorg/blog/mnore-how-pay-romneys-tax-cuts.