The economic impact of President Donald Trump’s tax overhaul, expected to take effect in April, is far from certain.
The administration’s plan would provide a boost to the average wage for workers in low- and middle-income brackets, but the data are hard to pin down because the details are secret.
Trump and his advisers are counting on a wave of public support to make the plan a reality, and a series of reports has shown that most Americans support it.
But for many Americans, that won’t be enough to offset the costs, according to the latest report from the Congressional Budget Office.
“I think the people of this country, especially those who are in the middle or lower middle class, they are going to have to take the hit from the tax plan, but we also want to see the economy do well,” Senate Finance Committee Chairman Orrin Hatch Orrin Grant HatchGOP senator calls for Kavanaugh nomination to be withdrawn Hatch on Kavanaugh: ‘I’m not a judge’ MORE (R-Utah) said Thursday.
“It’s important that we have the right policy to get our economy moving again.”
Economists and congressional aides have long predicted that Trump’s plan will generate a tax cut of $1 trillion or more.
But a number of studies have shown that the tax cuts would be temporary, not permanent.
While Trump’s proposal would be permanent, many economists have questioned whether it would have the economic impact that they anticipated.
According to the nonpartisan Tax Policy Center, which is a nonpartisan think tank, the tax bill would reduce gross domestic product by $1.4 trillion over 10 years.
That would have a positive effect on the economy, but economists say it is hard to measure the impact of a tax plan that will not have a lasting effect.
“If the tax proposal is not a tax reform that raises revenue and improves economic growth, then it will not be a tax overhaul that will lead to long-term economic growth,” said Richard Vedder, director of the Congressional Research Service, a nonpartisan arm of the Congress.
“This will have a limited impact.”
The CBO’s report came out just weeks after the administration released its own detailed economic report.
That report estimated that Trump would benefit from the legislation by boosting average wages by an average of $2,000, increasing the unemployment rate by 0.2 percentage points, and reducing taxes for the top 1 percent of earners by $3.6 trillion over the next 10 years, the CBO said.
But the president’s proposal does not contain many details about the tax plans tax cuts, and it is unclear whether those details will be included in the final bill.
A report by the nonpartisan Congressional Budget and Policy Center on Wednesday estimated that the plan would result in $1,766 billion in revenue over the coming decade.
But economists say the tax proposals would likely generate far less economic growth than that.
For example, the Tax Policy Institute, a conservative think tank based in Washington, D.C., estimates that Trump will boost GDP by an estimated $1 billion or more, but would see no long-run increase in wages or salaries.
A number of experts have called for a tax increase to address rising inequality and a decline in the cost of living.
“The President’s proposal is designed to create a temporary, $1-trillion tax cut for millionaires, while simultaneously adding trillions to the national debt over the long term,” Rep. Frank Pallone (D-N.J.) said in a statement on Wednesday.
“President Trump’s fiscal plan would also raise the federal deficit by $200 billion, while causing billions of dollars in long-lasting damage to the middle class.”
The Tax Policy Initiative, a group that studies tax policy, estimated that an increase in the federal minimum wage would cost the federal government $1-$1.5 billion in lost revenue over a decade.
“There is a lot of confusion about what the tax code does and how it is structured,” said Michael Biesecker, the president of the Tax Institute, which studies tax reform.
“In the real world, that’s a very small amount.”