House Speaker Paul Ryan pushes ahead with tax reform
Today at 12:45pm, House Speaker Paul Ryan will deliver his first major address on tax reform. Delivered at the National Association of Manufacturers’ 2017 Summit, Ryan is expected to make the case that permanent tax reforms – and not short-term cuts – are the way to go to achieve long-term economic growth.
The following AEI scholars are available to comment on Speaker Ryan’s speech specifically, and the prospects for tax reform more broadly.
Former senior economist at the Federal Reserve Bank of Dallas Alan D. Viard on the Ryan-Brady tax plan:
The House plan could promote economic growth by partially moving the tax system toward a Bradford X tax [a consumption-based tax], but some changes should be made. Raising the tax rates on business cash flow would help eliminate any revenue shortfall and maintain progressivity. The plan’s discriminatory inventory tax should be eliminated. Making modest changes would allow the plan to fulfill its growth potential. – The Brady-Ryan Plan: Potential and Pitfalls
Alex Brill, former policy director and chief economist of the House Ways and Means Committee:
Speaker Ryan is doing his best to kick start tax reform. House Republicans have crafted a smart, pro-growth reform proposal which is the benchmark against which all other tax reform ideas are now being compared. Nevertheless, this process is destined to take time and a 2017 bill signing is an ambitious goal.
Political economy and public finance expert Stan Veuger:
The [House Republican] plan shifts the tax base to being destination-based through a border adjustment tax (BAT) that exempts exports from taxation and subjects imports to a new 20 percent corporate tax rate… [However] It is effectively impossible to avoid the unintended consequences of implementing a border adjustment. For example, gradually phasing in the border adjustment would exacerbate the unintended consequences of anticipatory appreciation. Instead, policymakers need to recognize these imperfections and compare the current system of corporate taxation to realistic alternatives, not to Platonic forms of alternative tax systems. – Adjusting to the border adjustment tax
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