A key report shows the final GOP tax bill will boost the US economy - but it'll also fall well short of Republican promises

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A key report shows the final GOP tax bill will boost the US economy - but it'll also fall well short of Republican promises

Paul ryan donald trump kevin brady

Drew Angerer/Getty Images

House Speaker Paul Ryan, President Donald Trump, and Rep. Kevin Brady (L-R)

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  • Republicans revealed the final version of the Tax Cuts and Jobs Act on Friday.
  • According to an analysis by the Tax Foundation, the bill would boost US GDP by 1.7% over the long term and add $448 billion to the federal deficit.
  • While the report showed that the bill is "pro-growth," it falls short of Republican promises on growth and the deficit.


Congress is expected to pass the final version of the gigantic Republican tax overhaul by Wednesday, in a mad dash to get the bill on President Donald Trump's desk before Christmas.

While the bill was only released Friday, leaving little time to break down the impact of the legislation, the conservative-leaning Tax Foundation did release their initial analysis of the economic growth impact of the bill on Monday.

According to the Tax Foundation's model, which is generally considered aggressive in its assumptions about economic growth, the conference committee's version of the Tax Cuts and Jobs Act (TCJA) would boost GDP by 1.7% over the long run. In the short term, the model found that the bill will boost the GDP growth rate to 2.45% in 2018 from the current projection of 2.01%.

While the economic boost estimated by the Tax Foundation's model is significant, it still falls well short of a series of Republican promises.

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Based on analyses by Trump administration economists and other Republican economists, GOP leaders said that the tax bill could increase GDP by 3% to 5% over a ten year period. Additionally, the GDP growth boost would still fall short of the president's promised 3% annual growth.

Nicole Kaeding, one of the economists at the Tax Foundation, tweeted after the release of the report that the lower growth projection is mainly due to adjustments in the final bill that would make certain tax benefits for businesses less generous than in previous iteration of the TCJA, such as changes to how businesses can expense structures.

Given the muted growth effects, the revenue effects also end up falling short of the GOP's promise that the TCJA would pay for itself.

The model estimated that the increased economic growth would boost federal revenue by roughly $600 billion over a 10-year window, which would mean the plan wold still substantially increase the federal deficit.

"Overall, the plan would decrease federal revenues by $1.47 trillion on a static basis and by $448 billion on a dynamic basis, due to the aforementioned $600 billion in dynamic revenue reflow, expiration of multiple provisions, and the addition of the revenue generated from the functional repeal of the individual mandate," the report said.

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So while the Tax Foundation finds the TCJA to be "pro-growth," it still satisfies neither the economic boost nor the debt promises made by the Trump administration and Republicans.