Comprehensive Analysis Details Widespread Benefits to Economy, Workers and Businesses; Roundtable Says with Improvements, Camp Discussion Draft Could Produce Even More Growth
Washington – An independent economic analysis commissioned by Business Roundtable and conducted by Rice University Professors John Diamond and George Zodrow finds that the tax reforms offered recently by House Ways and Means Committee Chairman Dave Camp (R-MI) would yield significant economic benefits.
Specifically, the analysis shows that the Camp tax reform proposals would:
- Boost after-tax wages for American workers by 2.3 percent two years after enactment, by 3.8 percent after 10 years, and by 6.1 percent over the long term;
- Increase U.S. annual GDP by 0.9 percent two years after enactment, by 2.2 percent after 10 years, and by 3.1 percent over the long term; and
- Expand U.S. annual domestic investment by 1.8 percent two years after enactment, by 6.5 percent after 10 years, and by 6.8 percent over the long term.
“America’s business leaders have argued that tax reform will boost wages, growth and investment,” said Business Roundtable President John Engler. “The Diamond-Zodrow analysis affirms that we are on the right track. Better yet, with improvements, we believe the Camp draft could produce even more growth.”
The analysis also notes that rate-reducing reforms together with a broader tax base would:
- Improve the efficiency and productivity of the overall economy;
- Improve efficiency within the corporate sector; and
- Encourage more business investment in the United States.
“Chairman Camp’s draft has ignited a serious dialogue in Washington on how to achieve comprehensive tax reform,” said Engler. “The path ahead will be challenging, but we believe the connection between tax reform and growth is compelling. While Business Roundtable doesn’t support every provision in the draft, we will work with the Chairman and his colleagues to improve the plan and push for reforms that will send more Americans back to work and unleash our country’s full growth potential.”
About the study’s authors:
John W. Diamond is Chief Executive Officer of Tax Policy Advisers, LLC, the Edward A. and Hermena Hancock Kelly Fellow in Public Finance at Rice University’s Baker Institute for Public Policy, and an adjunct professor of economics at Rice University. He is the forum editor for the National Tax Journal and served on the Joint Committee on Taxation, United States Congress (2000-2004). He received his Ph.D. in economics from Rice University in 2000.
George R. Zodrow is President of Tax Policy Advisers, LLC and Allyn R. and Gladys M. Cline Professor of Economics and Rice Scholar, Tax and Expenditure Policy Program, Baker Institute for Public Policy, at Rice University. He is editor of the National Tax Journal. Zodrow was a visiting economist at the U.S. Treasury Office of Tax Analysis in 1984-85 during the preparation of Treasury I, the precursor to the Tax Reform Act of 1986. He received his Ph. D. in Economics from Princeton University in 1980.