Hillary Clinton’s proposed $498 billion tax increase would slash more than 300,000 jobs and lower workers’ wages, according to an analysis published Tuesday by the Tax Foundation. Using methods employed by the Congressional Budget Office and the Joint Committee on Taxation, the center-right think tank also determined that the Democratic presidential candidate’s plan would actually cause the federal government to lose revenue in the long run due to blunted economic output.
Using static scoring, which does not take into account real world factors contributing to the economy and merely uses basic arithmetic, the Tax Foundation concluded that the top 10 percent of taxpayers would see an income decrease of 0.7 percent and the top 1 percent would take a 1.7 percent hit. When applying dynamic scoring to better reflect real economic conditions, the analysis finds that all taxpayers would see their incomes fall by at least 0.9 percent.
While the bulk of new revenue is generated by implementing the “Buffett Rule,” a tax proposal pushed by billionaire Warren Buffett that would raise taxes on America’s wealthiest individuals and businesses filing as individuals, it would also adversely affect ordinary families already struggling to make ends meet. In a Clinton administration, a household earning the national median after-tax wage of $59,000 (2011 CBO statistics) would see its income drop by at least $531 annually.
Clinton and other liberals have long argued that taxing the wealthy to pay for lofty government spending programs was the only way to achieve greater income equality. These were not logical arguments, but rather emotional appeals, goading the working and middle classes to demand high earners pay their “fair share.” Stoking resentment and nurturing envy has been a go-to political tactic, and now Clinton means to deliver.
Source: Tax Foundation
Her proposal includes tacking on a 4 percent additional levy for those taxpayers making more than $5 million annually. This won’t just punish those she deems super rich. It would also affect those businesses that operate under similar tax parameters as individuals.
Setting aside the negative economic consequences (of which there are many), Clinton would actually undermine her aim of raising more revenue to pay for a bigger government. By modifying the long-term capital gains rate schedule, Clinton would “reduce revenue on both a static and dynamic basis due to increased incentives to delay capital gains realizations,” the Tax Foundation report concluded.
Clinton would also reinstate a 45 percent death tax paid on income left to loved ones after an individual’s death. She also would impose a tax on high frequency trading, though she is not specific about such a rate.
The result? Just $19.1 billion in new annual revenue to the federal government while reducing the nation’s gross domestic product (GDP) by 1 percent, eliminating 311,000 jobs, shrinking capital stock by 2.8 percent and reducing employee pay. With 2015 federal spending topping $3.9 trillion and only increasing each year, Clinton’s new taxes would be but a small line item on the country’s federal register but create disastrous economic consequences.
Clinton’s new taxes would be but a small line item on the country’s federal register but create disastrous economic consequences
This tax plan is only one of many of Clinton’s foolhardy fiscal proposals. Her ardent support for increasing the minimum wage to $12, for instance, would exacerbate poverty and cripple the economy.
Further, her commitment to enacting an additional $1.2 trillion in new spending programs at a time when the country faces nearly $19 trillion in compounding debt would put the United States on an unstable fiscal path. Instead of paying off our national debt and eliminating deficits in the style of the budget passed out of the Republican-led House and Senate this year, Clinton would make matters worse.
Under the Obama administration, American families have seen plummeting incomes, a significant drop in home ownership, lowest workforce participation rate in 38 years and astronomical increases to health care costs. Millions more are now on food stamps. If Clinton succeeds Obama, we can expect more of the same failed policies and a few new bad ones, too.
Ellen Carmichael is a senior writer for Opportunity Lives. Follow her on Twitter at @ellencarmichael.