An Analysis of the House GOP Tax Plan

Abstract

This paper analyzes the House GOP tax reform blueprint, which would significantly reduce marginal tax rates, increase standard deduction amounts, repeal personal exemptions and most itemized deductions, and convert business taxation into a destinationbased cash flow consumption tax. Taxes would drop at all income levels in 2017, but the highest-income households would gain the most. Federal revenues would fall by $3.1 trillion over the first decade (static) and $3.0 trillion after accounting for macroeconomic feedback effects. Including added interest costs, the federal debt would rise by at least $3.6 trillion over the first decade and by as much as $9.2 trillion by the end of the second ten years. *We are grateful to Lily Batchelder, Howard Gleckman, Robert Greenstein, Eric Toder, and Roberton Williams for helpful comments on earlier drafts. Yifan Zhang prepared the draft for publication and Devlan O’Connor edited it. The authors are solely responsible for any errors. The views expressed do not reflect the views of the House GOP or those who kindly reviewed drafts. This is an expanded and updated version of a paper posted on the Tax Policy Center website on September 16, 2016. The findings and conclusions contained within are those of the authors and do not necessarily reflect positions or policies of the Tax Policy Center or its funders. 258 COLUMBIA JOURNAL OF TAX LAW [Vol.8:257