A central aspect of the policy debate underneath both the impending fiscal cliff and taming the federal debt is the role of higher marginal tax rates in raising revenue. This short paper reviews the logic showing the damage from high marginal tax rates.
WASHINGTON - The American Action Forum today released a new study examining the Obama Administration's spending plan and its subsequent effect on tax rates. The paper finds that, in order to achieve primary budget balance by at least 2022, taxing only millionaires would require raising their taxes to 123.9 percent. Taxing only those individuals making over $500,000 would require an increase from 30.6 percent to 95.5 percent.
In a recent study, the American Action Forum found that the "premium tax" in the Patient Protection and Affordable Care Act (ACA) will cause patients to lose the insurance they have and like, lose their doctor, and ultimately pay a higher price for health care. The Forum's new video and info graphic demonstrate the impacts of this $78.2 billion tax. The complete study can be found here.
Today, I joined 87 other economists in warning that raising taxes on small businesses would have a detrimental impact on the economy; specifically by raising the top two tax brackets to their pre-2001 levels. Sadly in some circles, tax policy is viewed as a strictly political issue. In fact, it is a foremost economic policy issue – particularly when it is part of the $600 billion fiscal cliff.
Americans have always been very entrepreneurial—a majority of Americans will start a business at some point during their career, and there are many important legal as well as cultural advantages that set America apart from the rest of the world when it comes to business formation.[1] In most jurisdictions and in most professions it is quite easy to set up a business and the American culture lionizes the small businessman, two things that are not at all common elsewhere in the world.[2]
Monday, as the stock market failed to find purchase amidst the darkening clouds of the European debt crisis, there was devastating news underscoring just how bad things really are in America.
According to a report issued by the Federal Reserve, the median family’s net worth in American dropped nearly 40% between 2007 and 2010 – with a significant element of that decline coming on the heels of the housing collapse.
No matter what the outcome of the Wisconsin recall election will be this evening, this much is certain: The days of public employee unions being immune from the impact of our burgeoning national debt crisis are over.
There’s no mistaking that the battle in Wisconsin has significant national overtones that will be felt long after ballot boxes close this evening.
$46.7 billion is what President Obama believes is the figure that will transform America for future generations of its citizens. That’s the amount the President intends to raise in new taxes over 10 years under his latest class warfare tool – “The Buffet Rule”. Interestingly enough, Warren Buffet, the man who believes so passionately that he and others with mega-wealth should do more to transform America’s future, is worth $44 billion according to the most recent Forbes list of the world’s billionaires.
With tax day fast approaching, there is a considerable lack of clarity about what the tax code will look like this time next year. Small businesses and entrepreneurs are especially sensitive to current and expected tax policy given that they must make important, long-term decisions today on investment, hiring, and expansion. Accordingly, the highly uncertain outlook for U.S. tax policy has high stakes for their growth and survival. This paper examines the elements of three possible scenarios:
