Wednesday, November 14, 2012

Obama's Tax Plan Is a Disaster For The Economy: For Every $1 Obama's Tax Increase Plan Raises, GDP Will Decrease $10: Tax Foundation Study

From The Tax Foundation, "President's $1.6 Trillion Tax Bid Lowers GDP, Wages, Living Standards" by Scott A. Hodge, Stephen J. Entin:
the tax plan would increase federal revenues by $136 billion per year (in 2008 dollars). However, after accounting for the economic effects of the tax increases, fully 70 percent of the expected static revenue gain from the plan would be lost due to the dynamic effects of slower economic growth. For every $1 the plan would raise, GDP would fall by more than $10. That would seem like a poor tradeoff.
Distributional Affects: Losses in After-Tax Income Across the Board

The loss in GDP and incomes from the president's tax plan would be widely shared. Every income group would experience at least a 2.6 percent decrease in after-tax income from reduced wages and earnings on savings.

Regardless of the initial distribution of a tax change, the economic reactions to a tax increase distribute the economic losses (or gains in the event of a tax decrease) across the board.

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