4. The long-run effect of the 2017 tax reform: The Tax Cuts and Jobs Act of 2017 reduced the corporate tax rate in the United States from 34 percent to 21 percent. This question asks you to consider the long-run effects of this tax reduction on the U.S. economy. (a) Assuming the user cost of capital before the tax cut was 12 percent, what was the user cost of capital for corporations after the tax cut? (b) By what factor would this be expected to increase the corporate investment rate? For example, if the investment rate were 20 percent before the tax cut, what would you predict it to be in the long run after the tax cut? (c) If this same factor applied to all investment in the United States, by what percent would U.S. income per person increase in the long run according to the Solow model of Chapter 5? (Hint: Look back at equation (5.9) of that chapter.) (d) Professors Robert Barro and Jason Furman did a more careful version of this calculation and found that GDP per person would be expected to rise by 3.1 percent if the corporate tax cut were permanent. What might explain the difference between your finding in part (c) and their finding:15