According to the latest report from the Tax Foundation, the House Republican tax reform plan proposed by Speaker Paul Ryan (R., Wis) could potentially create 1.7 million jobs and increase after-tax incomes by 8.7 percent on average.
The plan proposes to lower marginal tax rates on wages, investments, and business income. Additionally, it simplifies the tax code so it could fit on a small postcard. The tax reforms would also the corporate tax rate to 20 percent while broadening the tax base, and further eliminate federal gift and estate taxes.
“There are a lot of reasons to support the GOP plan,” Speaker Ryan said. “It will level the playing field for American businesses, simplify the tax code to make it flatter and more fair, and usher in a new era of economic growth in our country.”
“Ultimately, this is about making sure you can find good-paying jobs and keep more of your hard-earned paychecks,” he said. “The moment to fix our broken tax code is now.”
The Tax Foundation analyzed the GOP proposal, also being called “A Better Way,” to determine the state-by-state impact on income and jobs.
On a national scale, the analysis calculated that the plan would create at least 1,687,000 full-time jobs and raise the after-tax income of median households by $4,917 on average. The increase in jobs and income will mostly be due to the reform’s ability to escalate productivity and economic growth.
“Our analysis found that the plan would significantly reduce the cost of capital and reduce the marginal tax rate on labor,” the report states. “These changes in the incentives to work and invest would greatly increase the U.S. economy’s size in the long run, boost wages, and result in more full-time equivalent jobs.”
The analysis found that after the implementation of the new plan, California would have at least 191,767 new full-time jobs, Washington DC would have 9,154 new jobs, Texas would see the creation of 140,734 jobs and New York will have 109,733 jobs.