Study says Obama tax proposals could cost 700,000 jobs

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DynoDon

http://news.yahoo.com/blogs/ticket/study-says-obama-tax-proposals-could-cost-700-145037841.html

"Republican House Speaker John Boehner hammered President Barack Obama on Tuesday after accounting firm Ernst and Young released a study funded by pro-business groups hostile to the Democrat's agenda. The firm's results showed that Obama's proposed tax hikes on the wealthy could cost the already sputtering economy more than 700,000 jobs.

"Our economy is still struggling under President Obama's policies, and his massive tax hike will only make things tougher," Boehner said in a statement. "It's one of the worst possible ideas at one of the worst possible times for families and small businesses."

Obama has been campaigning on calls to extend the Bush-era tax cuts on income up to $250,000 but let them expire above that level. He and fellow Democrats have accused Republicans of holding middle-class tax relief hostage to help the very rich (in fact, the wealthy would see the benefits on their first $250,000 of income). Recent polls have suggested that the public broadly supports the president in principle, though Republicans have noted that his proposal does not yet exist as legislation, and Democrats are expected to water down some of the president's recommended changes.

The Ernst and Young study looked at the impact of seeing the top marginal tax rates rise—but also studied the effects of a range of other proposals included in the president's budget and broader tax plans.

This report examines four sets of provisions that would increase the top tax rates:

· The increase in the top two tax rates from 33 to 36 percent and from 35 to 39.6 percent.

· The reinstatement of the limitation on itemized deductions for high-income taxpayers (the "Pease" provision).

· The taxation of dividends as ordinary income and at a top income tax rate of 39.6 percent and increase in the top tax rate applied to capital gains to 20 percent.

· The increase in the 2.9 percent Medicare tax to 3.8 percent for high-income taxpayers and the application of the new 3.8 percent tax on investment income including flow-through business income, interest, dividends and capital gains.

Here is what the accounting firm concluded would happen:

·  Output in the long-run would fall by 1.3 percent, or $200 billion, in today's economy.

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

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

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

Ernst and Young prepared the report on behalf of several pro-business groups, including the Independent Community Bankers of America, the National Federation of Independent Business, the S Corporation Association and the United States Chamber of Commerce. (One of the co-authors, Robert Carroll, served as deputy assistant secretary for tax analysis in George W. Bush's Treasury Department.) Asked for a formal response to the study, two White House officials declined to do so on the record.

"This report shows the president's small business tax hike threatens hundreds of thousands of jobs, and will lead to even less economic growth, less investment and lower wages for American workers," Boehner said.

The speaker underlined that the Republican-led House will vote this month to extend all of the Bush-era tax cuts and set the stage for a broader debate on overhauling the tax code."

 

It must be true. Wait-weren't Ernst and Young the auditors for Lehman Brothers? Tax hikes or tax credits have little impact on jobs. It's all about supply and demand. 

 

 

Comments

doh1304
doh1304's picture
Not to sound like a

Not to sound like a conservative, but I agree with the conclusions of the study. As long as the tax on capital gains is less than the tax on general income there will be an incentive toward short term strategies - layoffs and outsourcing. Similarly, if the government doesn't stop it there will continue to be increased numbers of "independent contractors" who will have lower base income and fewer deductions and credits, therefore by definition "lower after tax income". As long as there is no anti-trust enforcement there will continue to be mergers and acquisitions, which always leads to layoffs.

But really this is just another example of the fascists telling us what they are going to do. Of course after tax income will go down - it has been for thirty years. Of course unemployment will go up - at least if you believe the people who are going to do the layoffs. Of course investment will go down - just ask the people who are putting the money in their pockets instead of investing it .

DynoDon
What evidence is there that

What evidence is there that the rich use capital gains tax savings to create jobs rather than add to their Cayman Island accounts? Even Reagan raised capital gains tax to the regular income tax level. Don't penalize the working man!

Phaedrus76
Phaedrus76's picture
Here is what the accounting

Here is what the accounting firm concluded would happen:

·  Output in the long-run would fall by 1.3 percent, or $200 billion, in today's economy

--- 

In their first "conclussion the whole report is too stupid to be considered relevant. 

If tax cuts lead to lower growth rates, then over the conservative era in the US (1981 - present), we would see massive differences in economic growth in the US, vs the rest of the industrial world. France, Germany and Sweden all have much higher tax rates, and higher % of gdp of taxes collected. And yet the GDP growth rates of all these nations are pretty much in the same range. 

If lower taxes lead to faster growth, we should see an effect that shows the US (and Mexico which is the only large, industrial nation with lower taxes than the US) with much higher growth rates. Does anyone bellieve Mexico and the US economies have been growing much faster than the rest of the world for the last 31 years? If so, where is the data?

 

polycarp2
Perhaps someone should do a

Perhaps someone should do a simple study...a study of the top 400 earners in the nation. Their combined wealth equals that of  the 185 million people in the lower income ranges.

Just how many jobs have those 400 individuals created with their lower tax rates to justify the return to a medieval era wealth distribution structure?

Retired Monk - "Ideology is a disease"

Karolina
Karolina's picture
I am so glad to see you back,

I am so glad to see you back, Poly! :)

polycarp2
Karolina wrote: I am so glad

Karolina wrote:

I am so glad to see you back, Poly! :)


Sadly, my reason for being in Denver is no longer there.

I was told to visit the Midwest....I selected Missouri...and live as the secular poor and report back. My income was reduced.

Instructions: Rent the first home in your price range that you see. It didn't even have a place to plug in a telephone let alone a computer.

I'm about 25 miles from my Native American ancestors (grandma's) homeland.

Poverty within a monastery is one thng. Outside of it, it's quite another.

As a nation, we impose an amazing amount of unnecessary cruelty and suffering upon our own.

The local tax rate on food is 12.5%. It's called "equitable". taxation. It effectively cuts that amount from my already meager food budget as well as the food budgets of my neighbors.

.However, we mustn't place a tax burden on the wealthy....those who won't become malnourished by paying a higher income or property tax. Attempting to squeeze blood out of a turnip is the way things are done here.

The price of "equitable and fair" in this state seems to be a malnourished underclass.

A private firm issues license plates in my county on behalf of the state. I wonder what their cut is..

Retired Monk - "Ideology is a disease"

Karolina
Karolina's picture
polycarp2 wrote:Poverty

polycarp2 wrote:
Poverty within a monastery is one thng. Outside of it, it's quite another.

As a nation, we impose an amazing amount of unnecessary cruelty and suffering upon our own.

The local tax rate on food is 12.5%. It's called "equitable". taxation. It effectively cuts that amount from my already meager food budget as well as the food budgets of my neighbors.

However, we mustn't place a tax burden on the wealthy....those who won't become malnourished by paying a higher income or property tax. Attempting to squeeze blood out of a turnip is the way things are done here.

The price of "equitable and fair" in this state seems to be a malnourished underclass.

A private firm issues license plates in my county on behalf of the state. I wonder what their cut is...

Kudos for your devoted work.

I would imagine that "fasting" is altogether different than "being effectively starved by a cruel and colluded system."

To us at this site you are also bringing true information from the field already.....

LysanderSpooner
LysanderSpooner's picture
polycarp2 wrote: Perhaps

polycarp2 wrote:

Perhaps someone should do a simple study...a study of the top 400 earners in the nation. Their combined wealth equals that of  the 185 million people in the lower income ranges.

Just how many jobs have those 400 individuals created with their lower tax rates to justify the return to a medieval era wealth distribution structure?

Retired Monk - "Ideology is a disease"

Assuming that people earned their money without coercion (a huge assumption in our statist economic system), why do you deem that a "wealth distribution structure".  You seem to presume that the current distribution of wealth is wrong and needs to be corrected by the government. What exactly should the percentages be, Mr.Dictator?

pshakkottai
pshakkottai's picture
Austerity is merely

Austerity is merely propaganda considering that
a) Federal Deficits – Net Imports = Net Private Savings, is strictly true and the treasury and fed have been using these equations ever since they were created. How can anyone believe that reducing deficits on the left hand side increases savings on the right hand side?

All this talk about taxes is a distraction. The only solution is to increase deficits.

Mitchell says "The banks, owned by the 1%, caused the recession, but the blame had to be pointed elsewhere, and this “elsewhere” was the federal deficit. The money-backed media pounded on the notion that the U.S. government was just like you and me. It had to live within its “means.”

Never mind that the U.S. government, being Monetarily Sovereign, has no means, simply because it has the unlimited ability to create dollars. Forget facts. The media told the 99% three things:

1. Taxes needed to be cut, because taxes hurt economic growth (true.)
and
2. Federal spending needed to be cut, because spending increases the federal deficit (also true).
and
3. Just like personal debt, federal debt is a danger, and needed to be reduced (true about personal debt, false about federal debt).

What the bought-and-paid-for media refused to acknowledge is:

1. Income tax cuts benefit the 1% far more than the 99%, many of whom pay no income tax, but are hurt most by the unnecessary FICA tax.
and
2. Federal “deficits” are nothing more than an accounting term for the dollars the federal government adds to the economy, and a growing economy requires a growing money supply.
and
3. Federal finances are not like personal finances, the opposite in fact. The federal government never can run short of dollars.

So to accomplish the “need” to reduce deficits, Congress repeatedly voted to cut government benefits for the 99% — taxes on Social Security benefits, older starting dates for benefits, increased FICA payments, cuts in Medicaid support, reduced payments to doctors, who then began to opt out of SS, and hundreds of other cuts in social programs, all under the lie of “fiscal prudence.”  from

http://rodgermmitchell.wordpress.com/2012/05/20/how-does-the-1-convince-...

 

Phaedrus76
Phaedrus76's picture
To start with, change our

To start with, change our labor laws to something like Germany's, and then allow workers and employers to negotiate as equals over wages and benefits. That way, I, our Monk, or Dennis Kucinich are not making those wealth distribution decisions, but rather workers and employers are together.

Bring back tariffs, making it cost more to outsource and offshore jobs. Of course, that would kill off the profit center for Rmoney and Bane Capital.

drc2
LS, your concern about the

LS, your concern about the "statist economy" leads me to recommend David Graeber's DEBT.  He debunks the myth of the free market and the Utopianism of Adam Smith's moral philosophy with an examination of debt and money in 5000 years of human history.  He does not find a market economy to be among his observations, although markets operate within economies and societies.  They are always designed and enforced by the rulers of the State.

Going "democracy" does not eliminate the State, it just changes its ownership and authority metaphysics.  "The People" are no longer children or "the lost" who need an enlightened ordained by heaven leader/parent to guide and discipline them.  They are now "adults" who have the responsibility together to govern as a free people.  Taking care of the society beyond those participating in the economy does not get factored out of governing.

Why people are not participating in the economy is the concern of the State and it has high motivation to correct the non-participation if it is in democratic hands.  If the slave owners and banksters are in charge, the motivation of the State is to extract as much blood from the turnips as possible short of violent revolt.  Economic bubbles and crashes are just passed down to the peasantry, with the same caveat.  Only so much blood, please.

Graeber does show one historical example of a government-free, free market.  It was an Islamic trading curcuit that went through a number of separate kingdoms.  The merchants maintained this market by joining in a Pledge of Honor before Allah.  Their honor required that the customer leave knowing that he had gotten a great deal, not just feeling that way, but really having been treated with generosity.  If that was true throughout the system, the transfer of wealth in trade would decentralize the natural force of the market toward concentrations of profits in the merchants.   The weakest links in the chains would be "subsidized" and the prosperity of all protected.

So, this market system worked on cooperation and generosity.  Donald Trump, You ARE FIRED!!!   The Art of the Deal is a crock.  Debt is like fire in that you want to apply it to heat up the economic action and invest in something that will bring the heat.  You want it to be contained rather than out of control, but that also means not using the flamethrowers of war or you will find the house burning down.  When debt gets too hot or is burning, put out the flame.  Forgive it.  Corporate loves to use bankruptcy to put bad risk behind it.  Why not use it in civil policy without the stigmas and penalties?

I don't think the victims of bankster fraud owe the debts they have.  I don't think the banksters earned the money they stole.  Declaring it fraud and canceling the debts would be a just act, and it would not undermine anything real in the economy that we could not protect or rescue.  We just have to decide that the power of money is over and get back to what is real.  Small task, of course, this revision of ideology and reversal of power.  But it does begin in how we think things are.

Karolina
Karolina's picture
polycarp2 wrote:Just how many

polycarp2 wrote:
Just how many jobs have those 400 individuals created with their lower tax rates to justify the return to a medieval era wealth distribution structure?

In the medieval era, human beings were kept living in constant fear of the "spiritual" threats from the Church, (i.e.the wealthy), and physical threats from the royals and the elite, (i.e.the wealthy).

The huge majority of people (the peasants and the poor) were expected to submit and to conform. The tiny minority of the Church "executives," and the royals and elite were given their positions and WEALTH by GOD, so it was clearly GOD who had meant for the peasants and the poor to SUBMIT and CONFORM TO THE WEALTHY.

With the exception of GOD being replced by Ayn Rand as the antichrist :)
the same situation, and the same wealth distribution structure is falling beautifully into place right in front of our open eyes, for basically the same reason—constant FEAR of implied threats and actual police state threats!

WorkerBee
WorkerBee's picture
polycarp2][quote=Karolina

polycarp2][quote=Karolina wrote:

The local tax rate on food is 12.5%.

Where is this at? Was that a restaurant tax or food tax?

Karolina
Karolina's picture
WorkerBee wrote:polycarp2

WorkerBee wrote:
polycarp2 wrote:
The local tax rate on food is 12.5%.
Where is this at? Was that a restaurant tax or food tax?

Fix your post WorkerBee!