Goldman Sachs doesn't think the Republican tax bill would be a big boost to the US economy

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President Donald Trump

• Republicans have promised their tax bill would lead to a huge boost for economic growth.
• Goldman Sachs' economic team estimated that the bill would give the US a small economic boost in 2018 and 2019.
• "We note that the effect in 2020 and beyond looks minimal and could actually be slightly negative," the Goldman economists wrote.

In the lead up to the passage of the Republican tax bill in the Senate overnight on Saturday, GOP leaders boasted that the bill would be a huge boon fo the US economy.

Goldman Sachs does not agree.

Alec Phillips and Blake Taylor, analysts on Goldman's US economic analysis team, say the Senate version of the Tax Cuts and Jobs Act (TCJA) would provide a small short-term boost to growth. But that boost would quickly fade.

"We have increased our estimate of the growth effects of the legislation slightly, to around 0.3pp in 2018 and 2019," Phillips and Taylor said in a note to clients on Monday. "This reflects the slightly larger amount of tax cuts in the Senate plan following revisions, and our expectations regarding the eventual compromise."

The 0.3 percentage point boost is actually slightly higher than most expectations but well below Republican assurances. The Joint Committee on Taxation, Congress's official scorekeeper, said the bill would provide roughly a 0.08-point boost to the annual growth rate, based on a breakdown from the Committee for a Responsible Federal Budget.

The nonpartisan Tax Policy Center said it would be even smaller - an annual 0.002-point increase. The Penn-Wharton Budget Model said the legislation would boost growth by 0.03 to 0.08 points per year.

Many advocates of the bill have said it would boost GDP growth by 0.4 percentage points a year.

Phillips and Taylor also said that the repatriation of foreign-held assets, which Republicans have said would help the US economy, would actually do nothing for growth.

"On the corporate side, we disregard the temporary increase in tax payments in 2018 related to the tax on deemed repatriation; we do not estimate a growth effect from those repatriated profits, either," said their note.

There is another area where Goldman is more downbeat, too. While the JCT and TPC estimate continued small boosts for economic growth outside of two years, Phillips and Taylor aren't so sure.

"We note that the effect in 2020 and beyond looks minimal and could actually be slightly negative," said the note.