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1 Stephen J. Entin, et al., Evaluating the Economic Impact of Additional Government Infrastructure Spending 1 (2017)

handle is hein.taxfoundation/evcoimgfs0001 and id is 1 raw text is: FOUNDATION FISCAL FACT No. 535 Jan. 2017 Evaluating the Economic Impact of Additional Government Infrastructure Spending By Stephen J. Entin, Huaqun Li, and Kadri Kallas-Zelek Senior Fellow Economist Modeling Fellow .................................................................................................................................................................................................................................................................................................................................................................................................. Key Findings President-Elect Donald Trump and lawmakers on both sides of the aisle have expressed interest in a one-time investment in infrastructure as means to boost economic growth. The economic literature is all over the map when it comes to assessing the value of additional government civilian infrastructure. Estimates range from a zero to a 10 percent return on additional government capital in the United States. Using the Tax Foundation's Taxes and Growth Economic Model, we evaluate the economic impact of a $500 billion investment in infrastructure over the next ten years along with five funding mechanisms: borrowing; cutting government consumption spending; raising excise taxes; raising the top tax rate on individual income; and raising the corporate income tax. Both a deficit-financed investment in new infrastructure and one financed by lower government spending would boost long-run GDP by 0.11 percent, boost wages by 0.1 percent, and increase employment by 21.4 thousand full-time equivalent jobs. If funded by taxes, new infrastructure has a range of economic impacts depending on the tax used. New infrastructure funded by a broad-based excise tax would boost long-run GDP by 0.06 percent while the same investment funded by a corporate rate increase reduces long-run GDP by 0.41 percent. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) non profit organization. ©2017 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org

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