Tax Reform and U.S. Economic Growth

Dale Jorgenson and Kun-Young Yun

Journal of Political Economy, 1990, vol. 98, issue 5, S151-93

Abstract: In this paper, the authors evaluate the impact of the Tax Reform Act of 1986 on U.S. economic growth. The authors first calculate effective tax rates on income from capital employed in corporate, noncorporate, and household sectors.They then project the future growth of the U.S. economy with and without the 1986 tax reform. The authors find that much of the potential gain in welfare was dissipated through failure to index the income tax base for inflation. The most promising avenue for future reform is to include income from household assets in the tax base, while reducing tax rates on business income. Copyright 1990 by University of Chicago Press.

Date: 1990
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