Pethokoukis

CBO says tax hike for wealthy will hurt growth

Well, that’s not how Reuters described it:

CBO says tax hike for wealthy won’t kill growth

And here is the story:

Allowing income tax rates to rise for wealthy Americans would not hurt U.S. economic growth much in 2013 if Congress extends expiring tax rates on lower income levels, the Congressional Budget Office said on Thursday.

In a report expected to fuel Democrats’ post-election demands for higher taxes on the rich, the CBO said extending all of the Bush-era tax cuts, along with changes to the Alternative Minimum Tax, would boost U.S. gross domestic product growth by 1.5 percentage points, compared to letting these rates snap back to prior levels.

If the tax rates were extended only for individuals earning less than $200,000 and couples earnings less than $250,000, CBO said growth would rise by 1.25 percent — just a quarter point less than extending all of the cuts.

Or another way to put it is that raising those top-end rates would hurt growth by 0.25 pct points. And keep in mind the economy might well grow less than 2% next year as is. I think losing a quarter point is a pretty good chunk of growth.

14 thoughts on “CBO says tax hike for wealthy will hurt growth

      • Yeah! What have those free-loading lefties ever done for us?“…

        Open admission that you’re not a fan of the progressive tax system?

        • Nope. Personally, I am in favor of a VAT (assuming now other income, sales, or capital gains tax exists). It would be regressive since it is a consumption tax and consumption taxes are inherently regressive, but I feel it would be most efficient. It would eliminate many loopholes and red tape, plus allow every person to pay his “fair share” based on the level at which he consumes in the economy: those who consume more (the rich) will pay a higher tax than those who consume less (the poor).

          • jon says: “Nope. Personally, I am in favor of a VAT (assuming now other income, sales, or capital gains tax exists). It would be regressive since it is a consumption tax and consumption taxes are inherently regressive, but I feel it would be most efficient“…

            Hmmm, good idea but smacks of to much common sense…

            I always thought that excise tax would be the way to go…

          • VAT is a horrific tax as it increases prices all the way down the line and creates an enormous and burdensome bureaucracy. The Fair Tax is a much better way to go and will do so much more to A) stimulate the economy and B) help the lower and middle classes.

  1. Aaah, these wealthy; they are the victims of their own success and the anathemas of the “compassionate looters” but remember this:
    The horse wagon AMERICA has now so many “passengers” on it that they have started eating the “horses” one by one…

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