A new study by powerhouse accounting firm Ernst & Young finds that Obama's proposed tax hikes could kill 710,000 jobs nationwide, including 12,200 here in Colorado. The study found that the tax increases could result in an over $200 billion hit to the economy, with $3.5 billion of lost economic output in Colorado.
From the study:
With the combination of these tax changes at the beginning of 2013 the top tax rate on ordinary income will rise from 35% in 2012 to 40.9%, the top tax rate on dividends will rise from 15% to 44.7% and the top tax rate on capital gains will rise from 15% to 24.7%.
These higher tax rates result in a significant increase in the average marginal tax rates (AMTR) on business, wage, and investment income, as well as the marginal effective tax rate (METR) on new business investment. This report finds that the AMTR increases significantly for wages (5.0%), flow-through business income (6.4%), interest (16.5%), dividends (157.1%) and capital gains (39.3%). The METR on new business investment increases by 15.8% for the corporate sector and 15.6% for flow-through businesses.
This report finds that these higher marginal tax rates result in a smaller economy, fewer jobs, less investment, and lower wages. Specifically, this report finds that the higher tax rates will have significant adverse economic effects in the long-run: lowering output, employment, investment, the capital stock, and real after-tax wages when the resulting revenue is used to finance additional government spending. [Peak emphasis]
You don't have to take Ernst & Young's word for it. President Obama himself has said that raising taxes in a recession is bad policy. Let's check the tape:
President Obama: “The last thing we want to do is to raise taxes in the middle of a recession because that would just suck up, take more demand out of the economy.”
With unemployment rising in Colorado in both April and May, the time for tax increases, per Ernst & Young and the president himself, is not now. Actually, it’s pretty much never the time, but definitely not now.
“If our president is so out of touch as to think the private sector is “doing fine” and says “if you’ve got a small business, you didn’t build that,” then we shouldn’t be surprised that he believes a tax increase that will cost Americans jobs is the solution to get our economy back on track,” said RNC Spokesperson Ellie Wallace.
With this devastating study on the devastating impacts of Obama’s tax hike plan it will be interesting to see the reaction of Colorado Congressional candidates. Will the press pick up the phone and ask?