The evidence is in and no analysis of the tax legislation in Congress shows it covering its cost through increased economic growth, much less growing the economy enough to put a dent in the national debt. If lawmakers are truly serious about encouraging stronger economic growth over the long run, they should consider real tax reform that does not increase the debt.
Several models from an array of observers show that the tax cut bills being considered by Congress would increase the national debt, even when the effects of economic growth are factored in. This goes against the claims of supporters of the tax cuts, but it is in line with the historical and economic evidence that deficit-financed tax cuts do not pay for themselves. Instead of helping to fix the debt, such tax cuts will make an already bad situation worse.
Tax reform can play a critical role in growing the economy, but it needs to be done the right way. This includes not adding to the already unsustainable debt course. This can be done by addressing the numerous tax breaks that are essentially spending through the tax code.
The non-partisan Congressional Budget Office (CBO) found that higher debt will ultimately slow the growth of the economy. Whatever short-term boost may occur from these tax cuts will be negated by the effects of the higher debt. In fact, research from the non-partisan Joint Committee on Taxation indicates that tax reform that generates new revenue is actually better for economic growth than other options.
The evidence clearly shows that deficit-financed tax cuts will not provide a substantial, lasting boost to the economy. Policymakers who are really serious about enhancing growth should pursue fiscally responsible tax reform.
National Debt and You