There are some interesting comments circulating today about the Democrat’s plans to raise taxes. Citing the work of Cristine Romer (President Obama’a own Chief of the Council of Economic Advisers) The Wall Street Journal notes:
Democrats claim these tax increases on the rich won’t do any economic harm. They should read the work of Christina Romer before she became chief White House economist. Ms. Romer and her husband, David Romer, a Berkeley economist, have published multiple studies on the impact of tax policy changes over the past 100 years. One of their findings is that “tax increases appear to have a very large, sustained and highly significant negative impact on output.” In other words, tax hikes are an antistimulus.
Mr. Rangel and House Democrats are also banking on the idea that raising tax rates by 20% will raise 20% more tax revenue, but that’s like telling Wal-Mart it can raise prices by 20% and get 20% more profit. When taxes on the rich rise, their reported income tends to decline. The last time the top federal income tax rate was 50%, the richest 1% paid only about 25% of all income taxes. Today, at a 35% rate they pay nearly 40%.
Of the more stunningly obtuse fiscal maneuvers by President Obama and the Democrats, massive tax hikes in the middle of a severe recession takes the prize. So consumed are they with zeal to redistribute income, Democrats are substantively killing the goose that lays the golden eggs. This might be riotously funny black comedy except that it’s your job at stake. And speaking of jobs, Mort Zuckerman says the economy is even worse than we think:
The average length of official unemployment increased to 24.5 weeks, the longest since government began tracking this data in 1948. The number of long-term unemployed (i.e., for 27 weeks or more) has now jumped to 4.4 million, an all-time high.
The prospects for job creation are equally distressing. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers back to full time. Many unemployed workers looking for jobs once the recovery begins will discover that jobs as good as the ones they lost are almost impossible to find because many layoffs have been permanent.
These are facts that should be carefully weighed by voters while Congress considers a list of new taxes.