Treasury Secretary Steven Mnuchin said Thursday a sweeping GOP tax overhaul would generate more than enough economic growth to offset the cost, pressing the administration's argument that the plan would pay for itself.
"Not only will this tax plan pay for itself, but it will pay down debt," he said at a conference in Washington, arguing the proposal would fuel stronger growth, causing tax payments to rise and offsetting the revenue lost from lower rates. He also said lower rates would discourage corporate tax avoidance, which would help boost revenue.
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Analysts and economists on both sides of the aisle, however, have disagreed over how much growth tax cuts are likely to generate, and said there is no clear evidence that cuts generate enough growth to offset their costs.
Lily Batchelder, a professor of law and public policy at New York University, and former deputy director of the National Economic Council during the Obama administration, said it's "completely implausible" that the plan released Wednesday will pay for itself.
"Obviously we need a lot more details to precisely estimate the cost, both before and after taking into account economic growth," she said, but added, "It is quite clear that this is a very costly plan."
The proposal unveiled Wednesday laid out a range of changes to the tax code, including lower taxes on corporations, incentives for business investment, the end of the estate tax and fewer individual income tax brackets.
Mr. Mnuchin said he expects the plan would boost gross domestic product growth to an annual rate of 2.9% over the next 10 years, generating an additional $2 trillion of revenue. "We think that's very, very doable," he said.
More to come
(END) Dow Jones Newswires
September 28, 2017 15:44 ET (19:44 GMT)