Leading economists from across the nation signed a letter to Treasury Secretary Steven Mnuchin encouraging the passage of the Republican tax bill.
The letter could serve as an encouragement for the Trump administration who is pressing Congress to reform the tax code.
It is signed by economics professors from Harvard, Columbia, and Stanford University, and former budget directors and economic advisers under the Richard Nixon, Ronald Reagan and George W. Bush administrations.
In a letter addressed to Treasury Secretary Steven Mnuchin, economists Robert Barro, Michael Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence Lindsay, Harvey Rosen, George Shultz, and John Talor argue that the House and Senate bills would lift economic growth by encouraging investment and lowering the cost of capital.
The present debate over tax reforms proposed by President Trump’s administration and embodied in bills that have passed the House of Representatives and the Senate Finance Committee has raised the basic question of whether the bills are “pro-growth”: Would the proposals raise current and future economic activity and generate federal tax revenue that would reduce the “static cost” of the reforms? This letter explains why we believe that the answer to these questions is “yes.”
The letter continued:
“Another advantage of the corporate rate reduction embodied in the House and Senate Finance bills is that it would lead both U.S. and foreign firms to invest more in the United States. In addition, U.S. multinational firms would face a reduced incentive to shift profits abroad, which would raise federal revenue, all else equal.”
The economists concluded:
“You have consistently stressed that the objective of tax reform should be to enhance prospects for increased economic growth and household incomes. We agree with this objective, which is consistent with the traditional norms of public finance going back to Adam Smith. We believe that the reforms embodied in the House and Senate Finance bills would achieve this objective. The increased growth, in turn, would lead to greater taxable income and federal tax revenues, which would reduce the static cost of lost federal tax revenue from the reform.”
“We hope these analytical points of support for the growth effects of tax plans being discussed are useful to you and to the Congress as you complete the important economic task of fundamental tax reform. We would be happy to discuss our conclusions with you at your convenience.”
President Donald Trump is hopeful the Republican efforts can push the tax bill through the Senate “with just a few changes.”
He tweeted Monday, “The Tax Cut Bill is coming along very well, great support. With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!”
The Tax Cut Bill is coming along very well, great support. With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!
— Donald J. Trump (@realDonaldTrump) November 27, 2017