What do taxes hikes mean for you?  Be informed.  Be involved.  The National Association of Manufacturers estimates that 1,000,000 jobs will be lost in the first two years of a tax hike. 

The study calculated the effects of increasing the corporate tax rate to 28%, increasing the top marginal tax rate, repealing the 20% pass-through deduction, eliminating certain expensing provisions and more. The negative consequences would include the following:

• One million jobs lost in the first two years;
• By 2023, GDP would be down by $117 billion, by $190 billion in 2026 and by $119 billion in 2031;
• Ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively;
• And more.

        Renowned career academic and political bureaucrat, Janet Yellen, thinks differently supposing in an op-ed in the Wall St Journal that government confiscation all-around via a ‘low tax’ of your hard work and productivity means other global players might have to tax low as well in order to stay competitive with a reduced rate.  Lower overall global tax rates reduce government confiscation of your earnings that are allocated to government coffers for redistribution per their centralized priorities. 

Proponents of the TCJA [2017 tax cuts] said the U.S. would get something in return for these tax cuts. Lower rates, the argument went, would lure production and investment to our shores, but that hasn’t happened—and for an obvious reason: Other countries see what we’re doing and respond. When they see us lower our rates, they lower theirs to undercut us. In the end, no nation ends up more competitive. The result is a global race to the bottom: Who can lower their corporate rate further and faster?

        Ergo the argument goes that governments need a larger share of your productivity as they can allocate your excess capital and spend your money better than you or the Free Market can.  Over at the  American Institute for Economic Research, some would disagree.

The U.S.’s poorest have smartphones today, so what will it be tomorrow?

That’s the unknown question. The only thing the mildly sapient know is that if Yellen gets her way, tomorrow won’t be as abundant as it should be. It won’t be because Yellen believes her boss and his lieutenants in Congress are better at allocating resources than the world’s greatest companies.

        It’s not about politically expedient punchlines such as ‘soaking the rich’ or ‘fair share’; high taxes can have negative consequences for all.  At the  Tax Foundation, you can go deep into the data for yourself.

So what does the academic literature say about the empirical relationship between taxes and economic growth? While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.

“It’s not about politically expedient punchlines such as ‘soaking the rich’ or ‘fair share’; high taxes can have negative consequences for all.”