New Ernst and Young report: proposed tax increases will cost 710,000 jobs

Here’s the news from The Hill:

Allowing tax rates for the country’s highest earners to rise, an idea endorsed by top Democrats, would have a dire effect on the economic recovery, according to a new report prepared for business groups that was released Tuesday.

The study from Ernst & Young found that letting tax rates for the wealthiest Americans lapse would sap $200 billion and some 700,000 jobs out of the economy, reduce wages by 1.8 percent and lead to a decrease in investment.

“These results may suggest to policy makers that allowing the top tax rates to increase comes with economic consequences,” Ernst & Young’s Robert Caroll and Gerald Prante wrote in the report for the Independent Community Bankers of America, the National Federation of Independent Business, the S Corporation Association and the U.S. Chamber of Commerce.

“Long-run output can be expected to fall, and, depending on the use of the revenues, living standards, as reflected by workers‟ real after-tax wages, may also be lower.”

Top Republicans, including House GOP leaders and committee chairmen, jumped on the Tuesday report, as they continue to battle with President Obama and Democrats over how to proceed on tax issues and the broader fiscal cliff.

Obama reiterated last week his plan to only extend the Bush-era rates for annual family incomes up to $250,000 for another year, a proposal many congressional Democrats have coalesced behind. Republicans on the Hill want to extend all current rates for a year.

The key findings are here on the House Ways and Means Committee‘s web site:

Lower wages, fewer jobs and less investment

• Output in the long-run would fall by 1.3 percent, or $200 billion in today’s economy.
• Employment in the long-run would fall by 0.5 percent, meaning roughly 710,000 fewer jobs in today’s economy.
• Capital stock and investment in the long-run would fall by 1.4 percent and 2.4 percent, respectively.
• Real after-tax wages would fall by 1.8 percent, reflecting a decline in workers’ living standards relative to what would have occurred otherwise.

Every state in the U.S. feels the impact of tax hikes

• The report, which offers a state-by-state look at the impact on economic output and employment, finds that every state is affected negatively by the tax increases contemplated by the Obama Administration.

Ernst & Young is one of the top financial firms in the world. The report is entitled “Long-run macroeconomic impact of increasing tax rates on high-income taxpayers in 2013″.

Even though Obama has increased our debt by nearly 6 trillion in less than four years, that money hasn’t created any jobs because government is not efficient at creating jobs that last. When you take money away from people who create jobs, you lose the jobs.  Wasting money on green energy firms that go bankrupt is a great plan to pay back your campaign fundraisers, but it’s not a good plan to create jobs. Bailing out labor unions with billions of taxpayer dollars so that they can create electric cars that catch fire is not the right way to create jobs, either. That’s what the stimulus was – $800 billion dollars taken out of the hands of businesses and sent directly to Obama’s allies. We need to get the government out of our business if we want job creation.

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