Trump Tax Plan Will Not Bolster Growth, Economists Say -
By BINYAMIN APPELBAUMMAY 12, 2017
WASHINGTON — President Trump says the perfect medicine for the economy’s sluggish growth is a big tax cut.
“But poorly designed, deficit-increasing tax reforms are as likely to reduce growth as they are to add to growth.”
Economists see little short-term benefit in a tax cut,
but they think the government could strengthen long-term growth by focusing on the right problem: productivity.
Indeed, by some estimates, Mr. Trump’s plan could reduce economic growth — although such estimates necessarily
involve a large dollop of guesswork because the administration has provided few details.
Mr. Trump and his advisers say that leaving more money in the hands of businesses
and consumers will lead to more spending and investment, lifting economic growth, which has been stuck in a 2-percent-a-year rut.
An analysis by the Urban-Brookings Tax Policy Center of Mr. Trump’s campaign tax plan — which closely
resembles the current White House plan — projected that the net result would be slower growth.
“The top tax rates appear to have little or no relation to the size of the economic pie,” the Congressional
Research Service concluded in a 2012 report examining the impact of tax cuts on economic growth.