The Tax Cuts and Jobs Act: The Impacts of Jobs and Incomes by State
December 18, 2017
Congress is expected to vote this week on passage of the Tax Cuts and Jobs Act. Americans are trying to understand how changes to the tax code will affect their families. Congress’s plan would grow the economy while simplifying the tax code for most filers and reducing marginal rates.
Using the Tax Foundation’s Taxes and Growth (TAG) macroeconomic model, our analysis found that “the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 1.7 percent increase in GDP over the long term [and] 1.5 percent higher wages.”
The TAG model estimates that the plan would result in the creation of roughly 339,000 new full-time equivalent (FTE) jobs, while increasing the after-tax incomes by 1.1 percent in the long run, meaning families would see an after-tax income boost of 1.1 percent by the end of the decade, even after temporary individual income tax cuts expire.
The increase in family incomes is due in part from individual income tax reductions and the broader rise in productivity and wages due to economic growth. These estimates take into account all aspects of the Tax Cuts and Jobs Act, including changes to the individual and corporate tax codes.
The table below illustrates the state-by-state impact of the plan for both new jobs and the boost to after-tax incomes for middle-income families.
|Total||Estimated FTE Jobs Added||Estimated Gain in After-Tax Income for Middle-Income Family|
|United States Total||339,000||$649.43|
|District of Columbia||1,834||$780.80|