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The tax provisions in the “Build Back Better Act” proposed in the House Ways and Means Committee would result in long-run GDP dropping by more than $2 for every $1 in new tax revenue, according to the nonpartisan Washington-based Tax Foundation.

“It is important to consider the economic impacts, which include reduced economic output, wages, and jobs,” writes the foundation’s Garrett Watson.

We estimate that the Ways and Means tax plan would reduce long-run GDP by 0.98 percent, which in today’s dollars amounts to about $332 billion of lost output annually. We estimate the plan would in the long run raise about $152 billion annually in new tax revenue, conventionally estimated in today’s dollars, meaning for every $1 in revenue raised, economic output would fall by $2.18.”

According to the foundation, starting with a 0.09 percent drop in GDP in the first year (about $20 billion) and building to a 0.64 percent drop in GDP by 2031 (about $212 billion), the plan would result in a cumulative GDP loss of nearly $1.2 trillion from 2022 through 2031, as shown in the following Figure.

The Ways and Means tax plan reduces economic output by reducing the after-tax return to investment opportunities for firms and the incentive to work through higher tax rates on labor income. More than half of the plan’s economic impact is due to increasing the tax burden on corporations, which is the most economically costly way to raise revenue.

The report notes that even before accounting for a smaller economy, taxpayers earning less than $400,000 would see lower after-tax incomes due to higher corporate taxes and higher taxes levied on nicotine and cigarettes.

Overall, the plan would reduce average after-tax income per filer by $171 in 2031, on a conventional basis, and by $971 per filer in the long run on a dynamic basis. That is, the economic harm of the plan would reduce after-tax incomes by about $800 per filer on average each year.

The report concludes, “The economic harm caused by the tax increases would claw back some of the plan’s expanded tax credits aimed at low- and middle-income families. For those in the bottom 20 percent, it would reduce the average net benefit of the plan per filer from $341 to $233, a 30 percent reduction.”

Source: https://taxfoundation.org/house-tax-plan-impact/


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By: Val Wallace Zimnicki

The energy policies of the Biden administration are counter-productive and are harming the U.S.

The U.S. became energy independent a couple of years prior to President Biden’s executive orders. Biden stopped oil and gas leases on federal lands and then stopped construction on the Keystone pipeline. Simultaneously, he approved Russia’s Nord Stream 2 gas pipeline to Germany, which will supply that country as well as other European countries with oil, thus weakening U.S. oil exports. This puzzling action makes no economic sense. It’s a double-hit on U.S. oil exports and U.S. oil independence.  As a result, the U.S. is a net oil importer once again.

During the Trump administration, domestic oil production rose 44 percent, and we were a oil exporter for the first time in almost 60 years. This has changed. Due to Biden’s executive orders, we are now asking OPEC to pump more oil to meet our needs, and, of course, this comes at a cost. Gas and oil prices are now at highest levels in 7 years, since October 2014.

Americans are paying much more at the pump, and this hurts not only the middle class but the poor. Last year the national average for regular grade oil was $2.38 a gallon; today it’s almost a dollar more.

As usual, the costs are higher in Illinois and other blue states. Economists see oil and gas prices continuing to trend in an upward direction.

Transportation costs are not the only ones directly affected by the administration’s economic policies. Oil and natural gas are needed for products like tires, medical equipment, phones, shampoos, dresses, deodorants, sweaters, and about 6,000 other commodities. Watch for more inflation affecting many everyday products dependent on oil. Of course, politicians love higher-priced merchandise. Higher prices create higher taxes!


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A new report by the nonpartisan Washington-based Tax foundation disproves the charge by Washington Democrats that that wealthy Americans pay little taxes.

“As Congress considers several tax proposals designed to raise taxes on high-income earners, it’s worth considering the distribution of the existing tax code. While the image that rich Americans pay little taxes is popular, it’s a misconception: high-income individuals already pay a large share of taxes, even when compared to their share of national income,” reports the foundation’s Alex Muresianu.

The data and analysis from the preeminent nonpartisan governmental research organizations confirms this pattern.

Also, Congressional Budget Office (CBO) released its annual Distribution of Household Income report, this year relying on data from 2018. The data show that top-earning households pay substantial federal taxes. While the top 1 percent of earners took home 18.3 percent of market income in 2018, they paid 25.9 percent of all federal taxes; by the same token, the top 20 percent of earners received 59.1 percent of market income yet paid 68.9 percent of federal taxes.

According to the U.S. Treasury Department, the top 1 percent under current law will pay the highest average effective tax rate, when considering all federal taxes. This difference is largely due to the significant progressivity of the individual income tax: the bottom 40 percent of taxpayers on average pay negative effective personal income tax.

The foundation concludes, “Of course, some people will argue that even if the tax code is currently progressive, it should be even more progressive. But they should not dispute the fact that the wealthy pay a larger share of federal taxes than they earn of national income.”

Source: https://taxfoundation.org/us-tax-system-progressive/