To illustrate the impact of tax policy on economic growth, consider the impact of the capital gains tax. Highly regarded mainstream economist Allen Sinai concluded in a macroeconomic analysis that eliminating the U.S. capital gains tax would create jobs at a cost to the federal government of only $18,000 per job. In contrast, recent federal stimulus programs created jobs at a cost of $92,000 per employee.
To hear the two top tax writers in Congress say tax reform is “alive and doable” is a positive prognosis, but to go the distance they will need to be prepared to revive and stabilize tax reform to ensure a healthy patient in the end. Most importantly, they will need to heed the Hippocratic oath, “First, do no harm.”
Mark Bloomfield is president and CEO of the American Council for Capital Formation.