Share this story
Close X
Switch to Desktop Site

TAX REFORM; What economists say about the proposal

Donald T. Regan US Treasury Secretary ''Under our proposal, more motivation will be provided for all American workers, savers, and investors. The economy should grow somewhat faster than under current law, which will create more jobs and a sustained, non-inflationary expansion.''

Ben E. Laden, president, National Association of Business Economists

About these ads

''If you look at it on a long-term basis, the economy as a whole would be a winner. You would be replacing a system of special incentives with one in which you would let the market decide the best way to produce. In the long term it would be a stable environment that would allow growth to be as fast as possible and be better for holding down inflation.''

Steven W. Dobson, vice-president and senior economist, Bank of America

''I am not paying a great deal of attention to it. I don't think it will pass. There are a couple of conflicting effects. There is a positive part'' since the government would ''become more neutral in its impact on the economy. That is a plus. But the cost is less investment, less productivity. You would have slower growth in the long run. On balance I would call it negative.''

David Berson, senior economist, Wharton Econometric Forecasting Associates

''Almost certainly there would be a lowering of the rate of capital formation , which is obviously not a good thing. Study after study shows you get more bang for the buck in terms of increased (business) fixed investment through investment tax credits or accelerated depreciation, as opposed to cuts in corporate income tax rates,'' as the Treasury proposes. In the long run, the plan would ''lower growth, lower the rate of productivity increase'' and mean the economy will become more prone to inflation.

Lawrence Chimerine, chairman

and chief economist, Chase Econometrics

About these ads

''In the long term it probably would tend to promote more consumption and a little bit less investment, partly because of the corporate tax increase. From a long-term standpoint, that would tend to slow growth. If we were starting from scratch and designing a tax plan on Day One, I would like it a lot. My problem is that in going from where we are now, all at once, could create a lot of uncertainty and delay a lot of capital spending. If we change over rapidly and repeal the investment tax credit, it could have an adverse effect on capital spending. And you might not have some effect of lower tax rates quickly enough'' to offset the downward push that repealing the investment tax credit would have on the economy.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.