Posted by Ernest Istook on 12/21/2012 at 11:32 AM
For the next two years, conservative Republicans will be taunted as toadies of the richest 0.3% of Americans who earn $1-million or more a year. That's because they killed House Speaker John Boehner's "Plan B" to let taxes rise on that group, as the political price to avoid higher taxes for everybody else.
But the opposition to Plan B was not knee-jerk anti-tax-hike ideology. A Tax Foundation report (Read it here) shows that the whole country would have suffered as the millionaire tax rippled through our economy. The average taxpayer's income would drop by 1.3% and the national economy would lose $145-billion a year of GDP.
Rather than raising $40-billion for the Treasury, the report concludes the suppressed economy would lower the net tax revenue to $7-billion.
Losing $145-billion in GDP to gain $7-billion in revenue is a lousy trade-off. It kills $20 in the economy for every $1 of increased taxes. Report co-author William McBride, PhD (the Foundation's chief economist) told Istook Live! that the revenue gained could actually drop to zero, as the wealthy would adopt tax strategies to adjust to the new rates.
The report also details the negative consequences on business stocks, on wages and by hours worked.
In short, the impact aimed at the rich would actually be felt by the whole country. So by opposing higher taxes for anyone, the opponents of Plan B sought to protect everyone--not just the rich.