Analysis: Clinton tax plan would reduce wages, cut economic output

Analysis: Clinton tax plan would reduce wages, cut economic output

The tax plan of Democratic presidential candidate Hillary ClintonHillary Diane Rodham ClintonGrassley blasts Democrats over unwillingness to probe Clinton GOP lawmakers cite new allegations of political bias in FBI Top intel Dem: Trump Jr. refused to answer questions about Trump Tower discussions with father MORE would lower wages and cost the country more than 300,000 jobs, according to an analysis released Tuesday by the free-market Tax Foundation.

The group estimated that the Democratic presidential front-runner’s plan would reduce the nation’s gross domestic product (GDP) by 1 percent over the long run by imposing higher marginal tax rates on capital and labor.  

ADVERTISEMENT
"This reduction in GDP would translate into 0.8 percent lower wages and 311,000 fewer full-time equivalent jobs," the Tax Foundation said.  

Clinton's tax plan includes a 4-percent surtax on people making more than $5 million per year, enacting the "Buffett Rule" so that taxpayers with adjusted gross incomes over $1 million pay at least 30 percent in taxes and capping the value of itemized deductions at 28 percent, the Tax Foundation notes.

The proposal would raise government revenue by nearly $500 billion over 10 years when not considering the broader effects on the economy. When reduced economic output is taken into account, the Foundation said, federal revenue increases by $191 billion. 

When not accounting for changes in the economy, Clinton's plan would lower the after-tax income of people in the top 10 percent by 0.7 percent and lower the after-tax incomes of those in the top 1 percent by 1.7 percent.

But when the reduced GDP is taken into consideration, Clinton's proposal would lower all taxpayers' after-tax incomes by at least 0.9 percent, according to the analysis.

"This study shows Hillary Clinton’s plan to double down on the failed Obama economic agenda will only keep the American Dream out of reach of more Americans and bury the country in even more debt," Republican National Committee Chairman Reince Priebus said in a statement.

"The need for new Republican leadership in the White House couldn’t be clearer.”

The Tax Foundation has also scored the tax plans from the leading Republican presidential contenders. 

The group has estimated that several of the GOP candidates' tax plans would lower government revenue by more than $1 trillion.

This story was updated at 11:40 a.m.