The 2017 Tax Cuts and Jobs Acts offers a starting point for compromise to revitalize the corporate income tax, fellows Jorge Barro and Joyce Beebe write in this issue brief.
This issue brief presents the results of a dynamic model similar in nature to the macroeconomic models used by the Congressional Budget Office and Joint Committee on Taxation in evaluating the Tax Cuts and Jobs Act of 2017. The model shows a modest decline in wealth inequality due to the corporate tax cuts in the TCJA.
Many argue that sales and excise taxes are regressive based on the strict relationship between annual income and taxes paid, but the burden of higher sales taxes may actually fall more heavily on households with higher lifetime incomes.
While academic and popular debates tend to focus on differential benefits and costs of trade across countries or industries, this brief highlights winners and losers at the level of individual firms. The authors demonstrate that preferential liberalization produces concentrated benefits among a relatively small number of very large and productive firms.
Pablo M. Pinto, Leonardo Baccini, Stephen WeymouthNovember 21, 2017