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As Republicans write their 2025 tax plans, they are arguing that lower taxes promote growth and, at least in part, can pay for themselves by spurring economic gains that yield higher revenue. The reality, however, is more complicated, The Wall Street Journal reports.
While some business tax proposals can make the economy grow faster, economists say many of the individual tax cuts being contemplated wouldn’t help expand investment, gross domestic product or tax collections. Experts are also cautioning against banking on growth fueled by tax cuts to address the nation’s fiscal challenges.
Specifically, extending the lower individual tax rates that expire after 2025—the largest component of any likely tax bill and the one that directly affects the most voters—would put more money in consumers’ pockets without driving a meaningful change in the economy’s long-run trajectory. While there is broad bipartisan support for retaining those lower tax levels created by Republicans in 2017, experts say keeping individual tax rates in place is unlikely to change most people’s decisions about whether and how much to work.
