Transparency Would Improve JCT's Dynamic Analysis of the Camp Plan V. 1

About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

table,div,span,font,p{display:none}Please click here if you are not redirected within a few seconds.

1 Stephen J. Entin & Scott A. Hodge, Transparency Would Improve JCT's Dynamic Analysis of the Camp Plan 1 (2014)

handle is hein.taxfoundation/taxfaav0001 and id is 1 raw text is: TAX(%
FOUNDATION
Transparency Would Improve JCT's
Mar. 2014 Dynamic Analysis of the Camp Plan
No. 417
By Stephen J. Entin Scott A. Hodge
Senior Fellow President
Key Findings
* Rep. Dave Camp deserves credit for introducing dynamic
macroeconomic analysis into the tax reform discussion by
requesting a dynamic score of his plan from the Joint Committee
on Taxation (JCT).
According to the JCT's macroeconomic models, the economic
growth resulting from Camp's plan comes from higher labor force
participation and hours worked as well as higher consumption.
* JCT's models also show that Camp's plan raises the cost of
capital due to its heavy tilt toward lowering the tax burden
on individuals at the expense of higher taxes on business and
investment.
The JCT analysis overstates the resulting growth because it
underestimates the impact of reduced investment on wages and
it inappropriately includes consumption responses.
History tells us that capital is much more responsive than labor
to after-tax returns, thus any dollar- for-dollar rise in the tax on
capital and reduction in the tax on other sources of income must
reduce total inputs of labor and capital and reduce GDP.
Ultimately, the plan's effects on reducing capital formation will
translate into lower wages for workers, lower economic growth,
and, finally, lower tax revenues for the federal government.

........................................................... ...........