The tax overhaul is expected to spur a surge in the number of small businesses.
But a recent report from the Economic Policy Institute, a left-leaning think tank, predicts the impact will be less than hoped for.
The EPI’s report, released Friday, said that businesses could be hurt by a $2,500 tax on business income that is scheduled to take effect in January.
The new tax could bring in about $2 billion to $3 billion per year, but will likely hit only a small portion of the $7.2 trillion economy, the report found.
The Tax Policy Center estimates that it will generate about $100 billion in revenue.
The $2.5 billion in revenues from the new tax would represent less than 5 percent of the economy, according to the report.
While the new $2 tax could generate $2-billion-plus in revenue in the first year, that is only half of what is needed to offset the economic effects of the tax overhaul.
The EPI estimates that businesses will spend $3.2 billion less in the coming year than expected, on average, and that spending would fall to $2 million from $2 and $3 million, respectively.
In the first three months of 2019, the EPI predicts that the tax would raise $2-$3 billion in total, which is about 15 percent of economic output.
That is significantly lower than the $3-billion forecast from the Congressional Budget Office in February.
But the EPEI does say that the new bill will add roughly $400 billion in additional revenue to the federal deficit in 2020.
That would bring the deficit to $1.1 trillion.
The Congressional Budget Center projects that the bill will raise $1 trillion in revenue, but the EEPI projects that total spending will fall from $1 to $100.
It’s unclear exactly how much revenue the tax will add to the economy in the long run.
The Tax Policy Council, a nonpartisan policy research organization, has estimated that the $2 fee would generate about 3 percent of GDP.
It also notes that the Congressional Research Service, a think tank that tracks tax legislation, has found that businesses with small businesses and individuals would benefit from the tax.
The Congressional Budget and Tax Policy Committees are expected to unveil the legislation this week, with President Donald Trump expected to sign the legislation on Monday.