President Joe Biden’s proposed tax increases would cost the US economy at least 1 million jobs in the first two years, according to a study by the National Association of Manufacturers.
The study, released on Thursday, shows what short term and long term damage Biden’s tax hikes will cause to the economy.
“After decades of advocating for a tax system that provided competitive rates and modern international tax provisions, manufacturers in America kept our promises following the enactment of the 2017 tax reforms: we raised wages and benefits, we hired more American workers, and we invested in our communities,” said Jay Timmons, President and CEO of the National Association of Manufacturers.
“If we undo those reforms, all of that will be put at significant risk. Manufacturing workers will lose out on jobs, growth and raises. We should be building on that progress, not rolling it back. But the conclusion of this study is inescapable—follow through with tax hikes that give other countries a clear advantage and we’ll see far fewer jobs created in America,” continued Timmons.
The study, written by Rice University economists John W. Diamond and George R. Zodrow, simulated the effects of raising the corporate tax rate to 28%, increasing the top marginal tax rate, repealing the 20% pass-through deduction, eliminating certain expensing provisions, and taxing capital gains as income for those making over $1 million per year.
According to the results of the study, the US economy would lose one million jobs over the first two years, the GDP would fall by $117 billion by 2023, and ordinary capital, or investments in equipment and structures, would fall $80 billion.
“There are some who are well-meaning and have suggested that the U.S. corporate tax rate should increase, but not by as much as the 28% proposed,” continued Timmons. “Unfortunately, what that means is that America will still lose jobs and investment, just not quite as much. America just can’t afford that, especially now.”