Growth-supportive studies
For the growth objection to rescue the Romney plan, the increment to revenue they produce would need to be significant. Several attempts have been made to put ball-park figures on this in the studies the Romney camp cited in reply to the TPC. The main estimates are added separately.
Note the structure of the sub-tree of this node - not all of the studies cited by the Romney camp appear at the top level i.e. are direct children of this node. This is because we want to depict the dependencies between the studies that - according to the Romney camp - support his contention that all his stated goals for tax reform are achievable. Only the studies that directly claim a major boost to revenue from tax reform are added as direct children to this node. Hence the much-cited simulation by John Diamond does not appear at the top level, but rather as a child of the paper by Harvey Rosen, which directly addresses the revenue issue - but depends on the Diamond study for an estimate of the macro-dynamic growth impact of the Romney tax proposals.

The Diamond study in turn relies, to produce its 6.8 million extra jobs estimate, on a labor market analysis by Blundell et al. Some critics have attacked Diamonds' use of this study on the ground that certain key assumptions about the labor market are incompatible. But is this relevant to the revenue-neutrality debate, as distinct to the Romney camp's claims about the employment growth stimulated by his package?

Similarly, the quartet of pro-Romney economists who produced the economic 'White Paper' for the Romney campaign defended the feasibility of the tax proposal by pointing to several studies (including the Diamond one) that predict a significant growth effect from the tax reform proposals. They too do not directly estimate the revenue boost from such a growth increment. Hence their argument is added as a supportive node to the Rosen paper.

A more recent addition to the set of studies cited by the Romney camp by Stephen Entin and William McBride contains both an estimate of the increment to growth produced by tax reform over a 5 to 10 year time horizon and an assessment of the budgetary effects of such a growth boost. They calculate that the extra growth would reduce the amount of savings needed from base broadening by around 60 percent - making the task much easier.

The contribution by Martin Feldstein (and a revised version he produced in response to criticisms) takes a somewhat different tack in that it does not rely explicitly on a growth model to support its claims. Rather, he argues from that economic history supports the claim that taxable income will increase - he identifies both micro-dynamic and macro-dynamic factors underpinning this.

The main studies and the relevant arguments surrounding them are mapped below.
Immediately related elementsHow this works
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Visualizing the Romney Tax Debate Â»Visualizing the Romney Tax Debate
Romney's plan stated Â»Romney's plan stated
But does it compute? Â»But does it compute?
No - it does not compute Â»No - it does not compute
The TPC case Â»The TPC case
Growth effect claim Â»Growth effect claim
Ignores growth potential Â»Ignores growth potential
Growth-supportive studies
1. Rosen Â»1. Rosen
2. Entin/McBride Â»2. Entin/McBride
3. Feldstein Â»3. Feldstein
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