Long-run Macroeconomic Impact of Increasing Tax Rates on High-income Taxpayers in 2013

Ernst & Young LLP ^ | July 2012 | Drs. Robert Carroll and Gerald Prante, Ernst & Young LLP

[Son House]

Executive Summary ...

This report finds that these higher marginal tax rates result in a smaller economy, fewer jobs, less investment, and lower wages. Specifically, this report finds that the higher tax rates will have significant adverse economic effects in the long-run: lowering output, employment, investment, the capital stock, and real after-tax wages when the resulting revenue is used to finance additional government spending.

Long-run macroeconomic impact of increasing tax rates on high-income taxpayers in 2013

Through lower after-tax rewards to work, the higher tax rates on wages reduce work effort and labor force participation. The higher tax rates on capital gains and dividend increase the cost of equity capital, which discourages savings and reduces investment. Capital investment falls, which reduces labor productivity and means lower output and living standards in the long-run.

Output in the long-run would fall by 1.3%, or $200 billion, in today’s economy.

Employment in the long-run would fall by 0.5% or, roughly 710,000 fewer jobs, in today’s economy.

Capital stock and investment in the long-run would fall by 1.4% and 2.4%, respectively.

Real after-tax wages would fall by 1.8%, reflecting a decline in workers living standards relative to what would have occurred otherwise.

These results suggest real long-run economic consequences for allowing the top two ordinary tax rates and investment tax rates to rise in 2013. This policy path can be expected to reduce long-run output, investment and net worth.

[Son House]

Finally some real economic analysis rather then the media trying to promote the Democrat Economist trying to tell us about how Keynesian stimulus is working, and how paying off the escalating Democrat debt and deficits by raises taxes on the rich is going to make the private sector economy flourish.

November 2, 2009 JARED BERNSTEIN "So there's lots of good evidence that the act is working, and that shouldn't be a surprise to any one who has a drop of Keynesian blood in them."

October 22, 2009 Mark Zandi. "First, I think the fiscal stimulus, the recovery package, is working"

The complete text is at the link.

[Truth29]

Sounds like a perfect Obama plan - a further weakened USA, more government unemployment and dependency, less economic independence and, almost certainly, more government assistance and borrowing.

[monocle]

Liberals, progressives and socialists have allergic reactions to reason.

[1010RD]

You first have to destroy the “trickle down” meme. That’s not supply side, nor is it conservative.

Trickle down is an aristocratic approach developed and implemented by liberals. Look at Obama’s policies to date. Who gets all the money, but the felons at the top.

[CPOSharky]

“Lies, it’s all lies.” (libtard think OFF)