The Heritage Foundation

News Releases on Taxes

May 7, 2003

May 7, 2003 | News Releases on Taxes

Thomas Tax Cut Plan Would Strengthen Economy

WASHINGTON, MAY 7, 2003- A $575 billion tax-cut plan offered by House Ways and Means Committee Chairman William Thomas would give the economy a significant boost, an analysis by The Heritage Foundation shows.

According to calculations made by Heritage's Center for Data Analysis (CDA), the effects would be felt immediately and in the long term-creating, for example, approximately 828,000 jobs next year and an average of 574,800 jobs annually through 2008. In addition, the Thomas plan would raise gross domestic product substantially, producing nearly $258 billion in new goods and services over the next five years.

"It doesn't give the economy as much of a boost as the president's original plan, obviously," Heritage tax analyst Rea Hederman said. "But it's a significant improvement over the Senate's counteroffer, because it would encourage a considerable amount of new investment. The Thomas plan would give our sluggish economy the kick it needs to really grow."

Heritage economists also found that under Thomas plan, the after-tax income of American workers would grow by an additional $568 billion over the next five years. Personal savings, meanwhile, would rise by $308 billion-which, Hederman notes, would nearly double the current personal savings rate.

And the Thomas plan is more affordable than some critics claim, the analyst adds. By generating so much economic growth, the plan would cut its net "cost" almost in half, from $549 billion to $314 billion.

More information is available online at Heritage's "Reality Check" on taxes: www.heritage.org/research/taxes/taxbriefingroom.cfm

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