Ernst & Young: Tax Hikes Will Cost Jobs and Wages
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Sen. Patty Murray (D-WA) and others in Washington may have no problem wanting to raise income tax rates when we’re living with a sputtering economy, but a new Ernst & Young study finds that there will be serious negative economic consequences if that happens.
The study found that when combining rate hikes on income, dividends and capital gains, and eliminating certain itemized deductions, the top income tax rate will rise from 35% in 2012 to 44.7%. That would result in 710,000 fewer jobs, a 1.8% reduction in wages, and $200 billion in reduced economic output.
This study is unfortunately buoyed by a National Association of Business Economists report that found that 65% of those surveyed believe business sales will fall if we go over the fiscal cliff of automatic tax hikes and budget cuts.
House of Representatives Ways and Means Chairman, Dave Camp (R-MI) was troubled by the Ernst & Young report:
Rather than double down on tax hikes that will make it harder to get America back to work, it is time to stop the tax hike – for all taxpayers – and move forward with comprehensive tax reform that will provide the certainty these entrepreneurs need.
Speaker John Boehner (R-OH) called raising taxes “one of the worst possible ideas at one of the worst possible times.”
Our economy needs growth to create jobs and get people back to work. Raising taxes will not accomplish that.