In the Congressional Research Service’s report on the economic effects of the 2017 tax bill, Senior Specialist in Economic Policy Jane Gravelle and Specialist in Public Finance Donald Marples analyzed the effects of the Tax Cuts and Jobs Act (TCJA) on output and growth.
Lower interest rates since 2008 have reduced the cost of federal debt per dollar relative to the period before 2008. However, PWBM projects that the sheer size of federal debt will reach 190 percent of GDP by 2050 under present law. Even with low borrowing rates, stabilizing the debt-to-GDP level at its current value could increase GDP in 2050 by one to three times more than the projections we previously provided for the 2017 Tax Cuts and Jobs Act.
The New York Times’ Jim Tankersley cites PWBM in an explanation of how Trump's tariffs erase the benefits of the current tax cuts. In particular, Tankersley finds that the benefits of Trump's tax cuts to the lower and middle classes will likely unwind as a result of his tariffs on goods from China, Mexico, and Europe.
At the National Tax Association Spring Symposium, PWBM participated in a roundtable with other economic modelers. All modelers showed the results of cutting Social Security benefits by one-third in 2031. All models found that even with a benefit cut, by mid-century the U.S. still has a sizable debt-to-GDP ratio.
Due to various offsets, a $2 trillion federal investment would increase infrastructure spending across all levels of government increases between $440 billion and $2,033 billion---including the original $2 trillion---based on evidence of past experience.
If a gas tax were used to fully fund the $2 trillion investment, the gas tax would have to rise by $1.67 per gallon for 10 years, thereby increasing the current federal gas tax from $0.184 (18.4 cents) per gallon to $1.854 per gallon.
If fully deficit-financed, the $2 trillion infrastructure proposal lowers GDP between 0.1 and 0.5 by 2043, relative to current policy. If fully financed with user fees or higher gas taxes it typically boosts GDP, between -0.1 and 0.4 percent by 2043.
In Trump’s tariffs are equivalent to one of the largest tax increases in decades CNBC’s Steve Liesman analyses data from the Treasury Department to find that tariffs proposed by President Trump will raise $72 billion in revenue. Previously, PWBM has estimated the economic costs of a trade war and that the impact of a trade war could wipe out economic gains from last year’s tax cuts.
An interactive map shows the history of state-level expansion of the Earned Income Tax Credit (EITC) across the United States. States with Democrat governments and Democrat-Republican mixed governments are more likely to expand state-level EITC programs.
The closure rule is a necessary model assumption that prevents the debt-to-GDP ratio from exploding in the long-run. PWBM finds that each closure year assumption delivers similar results for macroeconomic variables over the next two decades.
Forbes Contributor, Sheila Callahan, covered USAFacts release of its third annual report on May 2, 2019. The report highlighted recent shifts in U.S. demographics, noting that seniors, 65 years and older, are now 16 percent of the population.
CNN reported on the first Tax Day under the Tax Cuts and Jobs Act. Lydia Depillis highlighted key economic effects of the 2017’s Tax Cuts and Jobs Act.
PWBM projects that the proposals in Fiscal Therapy by William Gale would reduce the debt to-GDP ratio from 188 percent to 17 percent in 2050 and increase long-run economic output by 7 percent.
FactCheck.org’s Eugene Kiely explored how to think about the impact of 2017’s Tax Cuts and Jobs Act (TCJA) on tax revenue through official measures of tax receipts. Treasury reports show that in 2018 tax receipts were slightly lower than in 2017. However, tax receipts in February 2019 were 10% higher than in February 2018. Kiely asked PWBM’s Alexander Arnon what these figures mean for future tax receipts.
We project that The Social Security 2100 Act would nearly eliminate Social Security’s conventional long-range imbalance while reducing the program’s dynamic short-range imbalance.
The Act reduces annual shortfalls that would otherwise add to national deficits under current policy, but at the cost of new tax distortions. The two effects nearly cancel in the macroeconomy. We project that the Act decreases GDP by 0.7 percent by 2029 and decreases GDP by 2 percent by 2049.
Previously, PWBM showed that reforms that combined tax increases with progressive benefit reductions could boost GDP by over 5 percent by 2049.
The Bureau of Economic Analysis (BEA) recently reported that real GDP grew 2.9 percent in 2018, up from 2.2 percent in 2017. This official government measure falls just below the range projected by PWBM in December of 2017 for the year 2018. At the end of December 2017, including the effects of the Tax Cuts and Jobs Act, PWBM estimated that real GDP would grow between 3.1 and 3.6 percent in 2018.
On March 4, Dylan Moriarty and Richard Rubin presented the Wall Street Journal Tax Calculator, powered by Penn Wharton Budget Model, to help taxpayers understand tax law as they prepare their taxes. Taxpayers only need to enter a few key characteristics such as income and marital status to get an estimate of their tax liability from 2018 to 2027.
In a previous blog post, I considered how wage changes are related to the decision to move and the decline in household movement observed in the last two decades (see Figure 1 below). However, wage changes aren’t the only reason households choose to move. Changing motivations for moving are illustrative in examining the broader context of internal migration.
We examine a range of policy options that put Social Security on a sustainable path.
The analysis emphasizes the need for analyzing Social Security reforms using deep modeling that reveals important interactions that challenge conventional wisdom.
Tax increases generally produce more growth than “current policy” analysis where shortfalls are combined with the standard unified surplus measure. Additional debt can be combined with changes in benefits to produce even more economic growth. Reforms that combine tax increases and progressive benefit reductions produce the most growth.
The Economist’s print edition, published February 7th, reports that “Some Fights About the Tax Cuts and Jobs Act Seem Over.” Public opinion polls indicate that voters think that “large corporations and rich Americans” are the ones benefiting from the tax law. Meanwhile, policy analysts continue to debate the details.