There Are No Winners When Taxes Are Raised On the Rich

Spring is in the air and Tax Season is here, and with it, tax increase plans are sprouting on Capitol Hill. Four Democratic Senators have introduced separate tax plans, each presented as helping working people.  In reality, any one of these plans would slow economic growth and harm working people.

Senator Bernie Sanders has introduced a 5% annual wealth tax, raising an estimated $4.4 trillion in new revenue to spend.  Like other wealth taxes imposed in Europe, this tax would not raise the promised revenue, be impossible to administer, and encourage capital flight.

Senator Ed Markey has sponsored a bill to raise the top capital gains tax rate by 60% to 45.7%, which would be the highest capital gains tax rate in the world.  If history is a guide, a higher capital gains tax rate would lose, not gain, federal revenue.

Senator Chris Van Hollen is proposing a bill imposing tax surcharges up to 12% on top of current tax rates, increasing the top tax rate to almost 50%.  This would be the highest U.S. tax rate in 40 years, and one of the highest personal tax rates in the world.

Senator Cory Booker has proposed a bill which would increase personal tax rates and raise corporate taxes by as much as $7 trillion, according to an analysis by the Tax Foundation.  The Senator claims his plan would be fully paid for by raising the corporate tax rate and other unspecified corporate tax increases, a sure-fire plan to tank the economy and kill American jobs.

Raising the corporate tax rate to 28% would increase the combined federal-state tax rate to nearly 33%, one of the highest rates in the world. Economic studies show that a higher corporate tax rate is economically damaging to investment, growth, and working people, reducing wages and forcing U.S. companies to shift jobs and operations overseas. 

A Tax Foundation study found that raising the rate by even a few points would shrink the economy and lead to smaller incomes for working people.  Economic research shows that workers bear the largest burden of a higher corporate rate, with studies showing that workers bear up to 70% of the tax burden. A Federal Reserve Board study found that a higher corporate tax rate would be “uniformly harmful to workers,” and would cost a typical household thousands of dollars a year in lost wages.

All these tax plans have one thing in common—-they would end up hurting working people.  The higher tax rates would reduce economic output and production, leading to lower take home pay and fewer jobs.  Job creators, entrepreneurs, and business owners would be hit by the higher rates, resulting in lower incomes and a lower standard of living for all Americans.