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4 total federal revenues would fall short of gas tax

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Unformatted text preview: d find themselves in the high-income bracket. Economic stagnation frequently results from just this “unseen” event: Someone somewhere simply does not work harder or more cleverly because of high taxation; and the result hurts everyone through slower economic growth. 10 | P a g e Taxes Bad DA BDL Tax Increases Cause Unemployment [____] [____] Higher taxes reduce employment William W. Beach, Director of the Center for Data Analysis at The Heritage Foundation, 2010 (September 20, “Obama Tax Hikes: The Economic and Fiscal Effects,” http://www.heritage.org/research/reports/2010/09/obama-tax-hikes-the-economic-and-fiscal-effects) Reduced Employment. Total employment would decrease by an average of 693,000 jobs over the 2011 to 2020 forecast horizon. Annual job losses would peak at 876,000 in 2016, and would cont inue to fall, albeit at a slower pace, through 2020. This forecast path would delay any sort of recovery in the labor market. The employment losses are caused by the direct and indirect effects of the higher tax rates on labor and capital. The direct effect happens at the margins where individuals choose to supply less labor due to the higher marginal tax rate. This is a relatively small effect when compared to the indirect effects that are set in motion by the changes in decisions to invest and grow the productive capacity of the economy. The higher capital income tax and the increased disincentives for saving and investment will likely force business owners to operate below potential and decrease their (planned and actual) investment in new equipment. A slowdown (or even continued pullback) in real business investment will lead to decreased levels of economic output that, in turn, will cause wages and salaries to be lower than they otherwise could have been, or cause employment levels to be lower. Capital gains also represent the additional value that entrepreneurs create when they implement new technologies, find better ways to make or deliver products and services, or introduce a better product or service to the market. Often these entrepreneurs will start a new company. Higher capital gains taxes discourage potential entrepreneurs who must already overcome the riskiness of the endeavor (i.e., the possibility of earning little or no return), borrowing, or other financing costs of the endeavor, as well as myriad other tangible and intangible constraints when deciding whether to become an entrepreneur 11 | P a g e Taxes Bad DA BDL Tax Increases Cause Unemployment [____] [____] Increased taxes depress growth, jobs and GDP Rea Hederman, Jr., Assistant Director, Center for Data Analysis and Research Fellow and Alfredo Goyburu, 2004 (“An Increase in the Gas Tax Would Hurt Consumers and Slow the Economy,” 3 -18, Heritage Foundation, http://www.heritage.org/research/reports/2004/03/an-increase-in-the-gas-tax-would-hurtconsumers-and-slow-the-economy) Some leaders in Congress want to increase the federal tax on gasoline by 5.45 cents per gallon, for the first year, and then index it to inflatio...
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This document was uploaded on 02/06/2014.

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