The 2017 US tax reform cut tax rates for C-corporations, expanded business equipment expensing, and cut marginal individual income tax rates. When those provisions are treated as permanent, a neoclassical model implies that their effects are that output per worker rises in the long run by around 5 percent for C-corporations, 3 percent for pass-through businesses, and 4 percent for the overall economy. Over ten years, the estimated boost to the growth rate of per capita GDP is about 0.2 percentage points a year. The cut in individual marginal income tax rates has a larger estimated short-run effect on economic growth, 0.9 percentage points per year for 2018–19. A measure of the tax wedge between C-corporate and pass-through forms fell from 60 percent in 1960 to 37 percent in 1986, to 22 percent in 1988, to 16 percent in 2017, and to 0 in 2018. The cumulative estimated positive effect on productivity is 16 percent. At the same time, there has been a negative trend in the C-corporate share of economic activity, reflecting shifts toward sectors that benefit less from C-corporate legal form and the enhanced attractiveness of pass-through alternatives, notably LLC-type partnerships.

This introduction summarizes the nine central chapters that make up this volume. Martin Feldstein examines the structural reasons for relatively high US growth rates, notes fiscal problems inhibiting future growth including in deficits in social insurance programs, and suggests reforms. Flávio Cunha examines how the development of human capital, especially at early ages, affects economic growth. George Borjas analyzes how increased immigration would affect economic growth in the United States. Glenn Hubbard explores the debate between “techno-optimists” and “techno-pessimists” on the growth effects of technological progress, while Timothy Bresnahan examines in detail the commercial applications of Artificial Intelligence Technologies (AITs). Robert Barro estimates the macroeconomic effects of the recently enacted Tax Cuts and Jobs Act, while John Diamond and George Zodrow examine the macroeconomic and distributional effects of a carbon tax. Ross Levine discusses the links between banking and economic prosperity, and Stephen Turnovsky examines the relationships among income, wealth inequality, and economic growth.