Trump v. Cruz: The Comparative Economic Effects of Two Tax Proposals

Taxes impinge on individual and business decisions to work, save and invest. Using a dynamic computable general equilibrium model that we created for the National Center for Policy Analysis (the “NCPA-DCGE Model”), we simulate the effects on the U.S. economy of tax proposals by Donald Trump and Ted Cruz. We find that both proposals result in significant positive impacts on output, investment, employment and household well-being, compared to a baseline estimate. We find that the Cruz plan has a stronger positive effect on the economy and causes a smaller decrease in government tax revenue than the Trump plan.

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