The newly amended Tax Cuts and Jobs Act is projected to lift gross domestic product by 1.7 percent, boost wages by 1.5 percent, and add 339,000 full-time jobs to the economy, according to an analysis from the Tax Foundation.
The final compromised legislation, which will be voted on later this week, includes some slight changes to the House and Senate versions. It includes reducing the corporate tax rate from 35 to 21 percent, keeping the number of tax brackets at seven but reducing the rates to 0, 10, 12, 22, 24, 32, and 35 percent, and increases the Child Tax Credit even further from $1,000 to $2,000 for singles and married couples.
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The bill also eliminates the Affordable Care Act's individual mandate, which requires that individuals purchase health insurance or pay a penalty to the IRS. These are just a few of the changes included in the final conference report, which the Tax Foundation says is closer to the Senate version than the House and includes a range of fixes, negotiated agreements, and compromises.
Speaker of the House Paul Ryan (R., Wis.) said a family of four earning an income of roughly $73,000 can expect to receive a tax cut of about $2,059 under the new plan.
"The conference committee took the best ideas from the House and Senate plans and made an even better bill," said Ryan. "The Tax Cuts and Jobs Act is now only two votes and a signature away from becoming the law of the land."
"This is what the American people have been waiting for: more jobs, fairer taxes, and bigger paychecks," he said. "We’re in the final stretch—and we’re ready to get this done for the American people by Christmas."
The Tax Foundation analyzed the details of the final bill and said it is a pro-growth plan that will increase revenues by roughly $600 billion from expected economic growth, reducing the cost of the bill. The foundation says the bill, as it is written now, is expected to increase capital stock by 4.8 percent and long-run GDP by 1.7 percent, add 399,000 full-time jobs, and boost wages by 1.5 percent. The analysis says GDP could be higher in 2018, increasing to 2.45 percent, which is higher than the baseline growth of 2.01 percent.
The report notes that if the plan were made permanent, there would be greater economic effects, but there would also be higher costs.
"If the entire plan were enacted permanently, it would increase long-run GDP by 4.7 percent, raise wages by 3.3 percent and create 1.6 million new full-time equivalent jobs," the report states. "However, the long-run cost of the bill would be $2.7 trillion on a static basis."
The final tax proposal has gained the support of Karen Kerrigan, president of the Small Business and Entrepreneurship Council, who says the bill will help small businesses through more investment and higher wage growth.
"The conference report is a solid bill that will enable strong and sustainable economic growth, which is critical to healthy entrepreneurship and small business growth," Kerrigan said. "It is vitally important that this tax package be signed into law this year to fuel the optimism and confidence that is strengthening our economy and bolstering investment, which is key to higher wage growth and more opportunity in areas of the country that have never recovered from the great recession."
"We appreciate the work of the conference committee, and specifically as it relates to keeping entrepreneurs, their workforce and the dreamers who want to start businesses at the center of tax reform," she said. "We urge the House and Senate to quickly pass the legislation so it can be signed by President Trump this year."