Details and Analysis of Rep. Jim Renacci’s Tax Reform Proposal
Rep. Jim Renacci’s (R-OH) tax plan would reform the individual income tax code and replace the corporate income tax with a 7 percent value-added tax. The congressman’s plan would reduce federal revenues by $845 billion over the next decade. However, the plan will end up raising revenue when accounting for the increased economic output in the long run.
According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly reduce marginal tax rates and the cost of capital, which would lead to 5.6 percent higher GDP over the long term and 1.9 million additional jobs. On a static basis, the plan would lead to 2.1 percent higher after-tax income for all taxpayers and 6.6 percent higher after-tax income for the top 1 percent. When accounting for the increased GDP, after-tax incomes of all taxpayers would increase by an average of 4.4 percent.