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Clinton's Tax Hikes Would Kill Nearly 700,000 Jobs

- October 12, 2016

The Non-Partisan Tax Foundation Estimates Clinton's Tax Increases Would Eliminate Jobs, Shrink The Economy, And Decrease Wages


TOP TAKEAWAYS

  • Today, the non-partisan Tax Foundation released a new comprehensive estimate of Hillary Clinton's tax proposals, showing they would shrink the U.S. economy and eliminate jobs.
  • Altogether, the Tax Foundation found that Clinton's tax hikes would kill 700,000 jobs, reduce the size of the U.S. economy by 2.6 percent, and lower the wages of American workers by 2.1 percent.
  • Americans at all income levels would see lower after-tax incomes under Clinton's tax plan because of the negative effect of higher taxes on the U.S. economy.
  • Because of their negative effect on growth, Clinton's tax hikes would raise far less than expected, but still amount to a massive $663 billion tax increase over ten years.
  • Some of Clinton's tax hikes would actually lose money because of their negative effect on the U.S. economy.

Bloomberg Headline: "Clinton's Tax Plan Seen Costing 697,000 Jobs Amid Lower Wages" (John Voskuhl, "Clinton's Tax Plan Seen Costing 697,000 Jobs Amid Lower Wages," Bloomberg, 10/12/16)

A NEW ESTIMATE FROM THE NON-PARTISAN TAX FOUNDATION SHOWS CLINTON'S TAX HIKES WOULD HURT THE U.S. ECONOMY AND HARM AMERICAN WORKERS

Clinton's Tax Plan Would Eliminate 700,000 Jobs, Shrink The U.S. Economy By 2.6 Percent, And Reduce The Wages Of U.S. Workers By 2.1 Percent

The Tax Foundation Estimates That Because Of Their Negative Effect On Growth, Clinton's Proposed Tax Hikes Would Decrease The Size Of The U.S. Economy By 2.6 Percent. "The plan would increase marginal tax rates on individuals and businesses, which would lead to a 2.6 percent lower level of GDP. The smaller long-run economy would also lead to lower levels of wages and full-time equivalent jobs." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

  • The Tax Foundation: "We Estimate That [Clinton's] Plan Would Reduce Long-Run GDP, Reduce Wages, And Reduce The Equilibrium Level Of Full-Time Equivalent Jobs." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

A Smaller U.S. Economy Under Clinton's Tax Hikes Would Lead To Nearly 700,000 Fewer American Jobs And Lower Wages For Workers. "According to the Tax Foundation's Taxes and Growth Model, Secretary Clinton's tax plan would reduce the economy's size by 2.6 percent in the long run (Table 2). The slightly smaller economy would lead to 2.1 percent lower wages, a 6.9 percent smaller capital stock, and 697,000 fewer full-time equivalent jobs. The smaller economy results from somewhat higher marginal tax rates on capital and labor income."' (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

Clinton's Tax Plans Reduce "Incentives To Work, Save, And Invest." "We predict that the reduced incentives to work, save, and invest would reduce the end-of-period GDP by 2.6 percent below the level it would have been without the policy change." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

Clinton's Tax Hikes Would Harm Americans At All Income Levels, Reducing After Tax Income Across The Board

The Tax Foundation Found That Because Of A Smaller Economy Under Clinton's Tax Hikes, Americans In Every Income Quintile Would See Lower Income Levels. "After the economy has adjusted to the new equilibrium level of GDP, wages, and employment, all taxpayers would see a reduction in after-tax income of at least 0.1 percent. Taxpayers who fall in the middle three quintiles would see their after-tax incomes decline by between 1.8 percent and 2.4 percent. The top 20 percent of taxpayers would see a reduction in after-tax income of 4.2 percent. The top 1 percent of all taxpayers would see the largest decline in after-tax income: 8.4 percent. Taxpayers in the bottom quintile would see a slight reduction in after-tax income of 0.1 percent." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

CLINTON'S TAX HIKES WOULD BRING IN LESS REVENUE THAN EXPECTED AMID A SHRINKING ECONOMY

Because Of Their Negative Effect On The U.S. Economy, Clinton's Mammoth Tax Hikes Would Raise $663 Billion, Less Than Half Of What They Are Estimated To Bring In On A Static Basis

The Tax Foundation Estimates That Clinton's Proposals Amount To A $1.4 Trillion Tax Increase On A Static Basis. "Our analysis finds that the plan would increase revenue by $1.4 trillion over the next decade on a static basis." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

But Once The Negative Effects Of Clinton's Tax Hikes On Economic Growth And Jobs Are Factored In, Tax Foundation Estimates That Her Plans Would Only Raise $663 Billion. "On a dynamic basis, the plan would increase federal revenues by $663 billion over the next decade. The slightly smaller economy would reduce wages, which would narrow both the individual income and payroll tax bases. As a result, the individual income tax proposals would raise less than half as much revenue as they do under the static analysis, while payroll tax revenues would decline." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

  • CNN Headline: "Clinton's Tax Plan May Not Raise As Much Money As Expected" (Jeanne Sahadi, "Clinton's Tax Plan May Not Raise As Much Money As Expected," CNN, 10/12/16)
  • Dynamic Scoring Accounts "For Changes In Economic Behavior" That Come From Changes In The Tax Code. "The lower number stems from the group's use of a method called 'dynamic scoring,' which seeks to account for changes in economic behavior that would result from changes to the tax code. In the case of Clinton's plan, higher marginal rates on both capital and labor income would mean that the economy wouldn't grow as much as it would without the effects of those changes, according to the analysis." (John Voskuhl, "Clinton's Tax Plan Seen Costing 697,000 Jobs Amid Lower Wages," Bloomberg, 10/12/16)

Some Of Clinton's Tax Hikes Would Actually Lose Money Because Of Their Negative Effect On The U.S. Economy

Clinton's Capital Gains Tax Increases Would Actually Lose The Federal Government $47 Billion When The Negative Economic Effects Are Factored In. "Clinton's plan to overhaul the taxation of capital gains by creating a six-year scale of graduated tax rates would raise $35 billion over 10 years on a static basis, but would actually reduce revenue by $47 billion under the Tax Foundation's scoring." (John Voskuhl, "Clinton's Tax Plan Seen Costing 697,000 Jobs Amid Lower Wages," Bloomberg, 10/12/16)

Clinton's Massive Death Tax Increases Would Generate Only $7 Billion Over Ten Years On A Dynamic Basis. "One of Clinton's most recent proposals -- overhauling the estate tax to require much higher payments from the largest estates -- would raise $309 billion over 10 years on a static basis, but just $7 billion under dynamic scoring, according to the analysis." (John Voskuhl, "Clinton's Tax Plan Seen Costing 697,000 Jobs Amid Lower Wages," Bloomberg, 10/12/16)

  • Clinton's Death Tax Increases Would "Greatly Reduce The Incentive To Save And Invest." "Her estate tax proposal would raise about $309 billion over the next decade, or about 19 percent of the total revenue impact of her plan. Yet, the new estate tax would account for about 40 percent of the economic impact of the plan. This is because the much higher marginal estate tax rates would greatly reduce the incentive to save and invest." (Kyle Pomerlau, "Details And Analysis Of Hillary Clinton's Tax Proposals, October 2016," Tax Foundation, 10/12/16)

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