GOP tax plan will explode deficit: Wharton study

GOP tax plan will explode deficit: Wharton study
© Greg Nash
The Republican tax plan expected to be released this week will explode the deficit, according to a study from the University of Pennsylvania's Wharton School released Monday.
 
The study, which relies on the Penn Wharton Budget Model (PWBM), found that the deficit would increase by $1 trillion to $3.5 trillion over the course of the first decade, based on differing estimates of how the final plan will look. By 2040, the plans would cost between $2 trillion and $10.6 trillion.
 
House Republicans are set to reveal their tax plan Wednesday, adding details to the framework that calls for lowering corporate taxes, paring down the number of tax brackets and eliminating a variety of loopholes.
 
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Under rules specified in the GOP budget approved last week, the Republican tax plan can add $1.5 trillion to the deficit before running afoul of special procedural rules that will fast-track the bill in the Senate.
 
Administration officials such as Treasury Secretary Steven MnuchinSteven Terner MnuchinFive key players in Trump's trade battles Pelosi warns Mnuchin to stop 'illegal' .3B cut to foreign aid Trump phoned bank CEOs as stock market plunged Wednesday: report MORE have argued that the plan will stimulate enough economic growth to cover the deficit, or even reduce it.
 
The Wharton sudy estimated that the country's economy would grow between 1.3 percent and 1.5 percent over the first decade, which would average out to about 0.2 percent of extra growth each year, well below the levels suggested by the administration.
 
The study also contradicted White House claims that the tax plan's corporate tax cuts would largely end up in workers' pockets, estimating that labor wages would only increase 1.3 percent to 1.4 percent over a decade.
 
With no major legislative victories under their belts nine months into the Trump administration, Republicans see tax reform as politically crucial ahead of the 2018 midterm elections.