→ Romney Tax Plan Would Increase GDP by 5.4%, Add 6.8 Million Jobs

The abstract of John W. Diamond’s1 paper on the Romney Tax plan:

There is widespread recognition that the U.S. income tax is a complex, highly inefficient, and costly way of raising revenues to finance government expenditures. In this paper, I analyze a rough sketch of the Romney Tax Plan — a rate-reducing, base-broadening tax reform. The simulations show that such a base-broadening, rate-reducing reform would have significant positive economic effects on the U.S. economy, including increases in investment, the capital stock, employment, and real wages. These gains are in addition to increases in GDP, investment, consumption, and employment that will occur as the U.S. economy continues to recover from the recent recession and as the population grows. Specifically, I find that the reform would, if passed immediately, increase GDP relative to baseline by 5.4 percentage points over the next decade, while creating 6.8 million jobs.

Sounds good to me.

(via The Right Coast)


  1. Edward A. and Hermena Hancock Kelly Fellow in Public Finance at Rice University