With tax reform in the news and Thursday’s release of the Senate version of the Tax Cuts and Jobs Act, Americans are trying to understand how changes to the tax code will affect their families. The Senate’s plan would grow the economy while simplifying the tax code 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 3.7 percent increase in GDP over the long term [and] 2.9 percent higher wages.” The TAG model estimates that the plan would result in the creation of roughly 925,000 new full-time equivalent (FTE) jobs, while increasing the after-tax incomes by 4.4 percent in the long run, meaning families would see an after-tax income boost of 4.4 percent by the end of the decade. 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 Senate version 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. Source: The above income figures are increases in each state’s median income, using data from the U.S. Census Bureau and our Taxes and Growth Model. Note: Our analysis includes corrections made to our model in November 2017, to address concerns raised by the Washington Center for Equitable Growth. Therefore, these results are not directly comparable to the House results issued on November 3, 2017. Estimated FTE Jobs Added Estimated Gain in After-Tax Income for Middle-Income Family United States Total 925,000 $2,598 Alabama 12,640 $2,078 Alaska 2,126 $3,332 Arizona 17,299 $2,512 Arkansas 7,853 $2,020 California 105,410 $2,932 Colorado 16,622 $3,105 Connecticut 10,742 $3,341 Delaware 2,897 $2,554 District of Columbia 5,004 $3,123 Florida 53,631 $2,252 Georgia 28,007 $2,355 Hawaii 4,143 $3,174 Idaho 4,454 $2,489 Illinois 38,465 $2,701 Indiana 19,721 $2,468 Iowa 10,046 $2,600 Kansas 9,019 $2,500 Kentucky 12,246 $1,996 Louisiana 12,611 $1,857 Maine 3,949 $2,238 Maryland 17,322 $3,245 Massachusetts 22,784 $3,180 Michigan 27,672 $2,512 Minnesota 18,524 $3,090 Mississippi 7,322 $1,808 Missouri 18,183 $2,421 Montana 2,992 $2,511 Nebraska 6,493 $2,612 Nevada 8,316 $2,439 New Hampshire 4,275 $3,355 New Jersey 26,072 $3,013 New Mexico 5,314 $2,132 New York 60,108 $2,703 North Carolina 27,763 $2,366 North Dakota 2,782 $2,648 Ohio 35,063 $2,375 Oklahoma 10,566 $2,241 Oregon 11,724 $2,602 Pennsylvania 37,639 $2,683 Rhode Island 3,135 $2,707 South Carolina 13,139 $2,391 South Dakota 2,768 $2,528 Tennessee 18,973 $2,259 Texas 76,949 $2,558 Utah 9,131 $2,969 Vermont 2,003 $2,677 Virginia 25,062 $2,924 Washington 20,753 $3,094 West Virginia 4,784 $1,952 Wisconsin 18,707 $2,632 Wyoming 1,796 $2,544
