• Entertainment
  • Finance
  • Marketing
  • Real Estate
  • Technology
  • Social
National Journal Community Of e-Experts
Finance 0

If GDP Growth Is 3% Over The Next Ten Years, The Income Tax Revenue Actually Rises By $544 Billion

By Kurt Osterberg · On April 16, 2018

This past week the Congressional Budget Office (CBO) released their budget projections for FY 2018 through FY 2028. The budget projections include a host of assumptions on things like GDP growth, potential GDP growth, interest rates, employment, revenues, and expenditures, to name a few. Within the CBO information lies an assumption on a number that can, at times, have an impact on market participants (the impact is mostly indirect, but the influence is still there). The figure is the projected GDP growth rate over the next 10 years.

If you don’t already know the figure, what would you guess they assumed? Would you guess they assumed something like 3% GDP growth – the figure the Trump Administration used when releasing their budget proposal? If you’re a student of politics, you likely know that the CBO is almost always more pessimistic than the President’s Office of Management and Budget (OMB), and thus projected a lower growth rate. But, how much? Would you guess 2.6% – the growth rate we saw in 2017? Perhaps something in-between, like 2.75%? Interestingly, the CBO assumed an average annual growth rate of 1.9%.Is this realistic? And, does it even matter?

The answers to these two questions largely depend upon whether markets and the public care about the agenda of the CBO.

For the moment, let us assume that it does matter, and for the following reason.In the policy world, the question is always – Do tax cuts pay for themselves? Well, if the cuts lead to permanently higher GDP growth, then the answer is always yes, by definition. If the tax cuts only provide one-time boosts to the economic growth picture, or perhaps if you’re an extreme opponent of the tax cuts, don’t provide any boost to growth at all, then the tax cuts never pay for themselves. The bias of economists generally falls into the one-time boost to economic growth camp, but that tax cuts almost never pay for themselves. [Just a note: the article and the Harvard economists shouldn’t say they “found” that the tax cuts won’t pay for themselves, since you can’t “find” something that hasn’t happened yet. The article should say “assume” based upon the assumption of the economists’ models.)

Print Friendly, PDF & Email

Share Tweet

Kurt Osterberg

You Might Also Like

  • Finance

    STEPN Sneaker NFTs Sell For $100, Previously Worth $1200

  • Finance

    NFT Prices in Free Fall – 5 NFT Collections to Start Buying Today

  • Finance

    5 NFTs Trending on Twitter Going Cheap to Invest in Now

No Comments

Leave a reply Cancel reply

Top Finance

  • 3 Best Large-Cap Blend Mutual Funds For Enticing Returns 3 Best Large-Cap Blend Mutual Funds For Enticing Returns
  • What is Value Chain Analysis? How to Deliver Value & Gain a Competitive Advantage What is Value Chain Analysis? How to Deliver Value & Gain a Competitive Advantage
  • Hedge Funds In The US Hedge Funds In The US
  • 5 Ridiculously Useful Non-Monetary Reward Examples that Improve Employee Engagement 5 Ridiculously Useful Non-Monetary Reward Examples that Improve Employee Engagement
  • Chart: Amazon’s Dominance In Ecommerce Chart: Amazon’s Dominance In Ecommerce

New Posts

  • STEPN Sneaker NFTs Sell For $100, Previously Worth $1200

    STEPN Sneaker NFTs Sell For $100, Previously Worth $1200

    June 20, 2022
  • NFT Prices in Free Fall – 5 NFT Collections to Start Buying Today

    NFT Prices in Free Fall – 5 NFT Collections to Start Buying Today

    June 20, 2022
  • 5 NFTs Trending on Twitter Going Cheap to Invest in Now

    5 NFTs Trending on Twitter Going Cheap to Invest in Now

    June 20, 2022
  • Bill Gates – ‘NFTs & Crypto Based on Greater Fool Theory’

    Bill Gates – ‘NFTs & Crypto Based on Greater Fool Theory’

    June 20, 2022
  • Actor Seth Green Pays $300,000 to Recover his Stolen BAYC NFT

    Actor Seth Green Pays $300,000 to Recover his Stolen BAYC NFT

    June 20, 2022
  • About
  • Contact Us
  • Privacy & Policy
  • Sitemap
  • Terms of use

Copyright © 2018-2021 NJCEE. All Rights Reserved.