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Thursday, May 7, 2015

Analyst: Dodd-Frank to Reduce GDP by $900B over 10 Years

Complying with the Dodd-Frank Act is projected to reduce U.S. gross domestic product by $895 billion from 2016 to 2025, according to an analysis yesterday from Douglas Holtz-Eakin of the American Action Forum.

According to Holtz-Eakin, financial institutions will spend roughly $14.8 billion per year on Dodd-Frank compliance, which — along with increased equity capital banks hold — he described as the equivalent of a 9.3 percentage point increase in their effective tax rate. He concluded:

[T]he impact on economic growth is a decline in the per capital growth rate of 0.059 percentage points annually. The lower rate of economic growth translates into a total loss of $895 billion in GDP or $3,346 for every member of the working age population over those 10 years.

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