Tax Plan’s Biggest Cuts Could Be in Living Standards<br />A decade ago or so, the nonpartisan Tax Policy Center and the liberal-leaning Center on Budget and Policy Priorities estimated<br />that making the Bush tax cuts permanent — rather than letting them expire in 2010 — would increase the after-tax income of people earning $1 million or more up to 7 percent, an order of magnitude more than it would increase the size of the economy in the long term.<br />In the summer of 2006, as President George W. Bush was pressing to make permanent the tax cuts he had pushed through Congress in 2001<br />and 2003, the Treasury Department published a so-called dynamic analysis that, the administration hoped, would prove the undoubted economic benefits of the extension.<br />Treasury Secretary Steven Mnuchin insists that the tax overhaul passed by Republicans in the Senate<br />this month would increase annual economic growth by 0.7 percentage points over the next decade.<br />But its conclusions didn’t draw much applause from the White House: In the long term, the Treasury’s<br />Office of Tax Analysis found, the tax cuts would expand the economy by all of 0.7 percent.<br />It never specified what it meant by “long term,” but on the assumption it means a couple of<br />decades, the tax change would add 0.035 percent to annual economic growth over the period.<br />But an analysis by Congress’s nonpartisan Joint Committee on Taxation projected less stellar results:<br />In the course of 10 years, the tax cuts would make gross domestic product 0.8 percent larger.<br />The bottom 80 percent of American families, by contrast, would actually be worse off because they would bear the brunt of paying for the cuts.
