The long-term effects of each presidential candidate’s tax plans could have different pitfalls and benefits to the nation’s economy, according to Tax Foundation, a nonpartisan tax research group.
Over time, it said, Romney’s plan would increase the country’s gross domestic product by 7.4 percent, while Obama’s would decrease it by 2.9 percent.
However, it said Obama’s plan would increase federal tax revenue by $41 billion, while Romney’s would decrease it by $136 billion.
For every dollar raised in tax revenue under Obama’s plan, the economy would lose $10. With Romney’s plan, the group said, every dollar lost in tax revenue would gain $8 for the economy.
“There are more economically friendly ways to raise revenue that do not put so much of the burden on investors and workers. A more evenly distributed tax burden, one that taxes consumption today and tomorrow at the same rate, will generate more economic growth and ultimately more sustainable government finances,” according to the report.
Other indicators in the report show that while Romney’s plan would increase wages (4.7 percent versus -2.3 percent) and capital stock (18.6 percent versus -7.5 percent), Obama’s plan would increase federal revenue ($136 billion versus -$336 billion), and would reduce the deficit ($55 billion versus -$170 billion).
The figures in the report were calculated using the Tax Foundation’s tax simulation and macroeconomic model, which figures how tax policies would affect key economic indicators.
Romney’s plan to reduce government spending and Obama’s corporate tax proposals were not factored into the data due to a lack of specifics.