Hillary Clinton's plans for reform taxes would raise nearly $500 billion in a decade on paper, according to new research, but would crimp economic growth and lower incomes for all workers, meaning that the actual revenues collected by government would be lower.
On Tuesday, the Tax Foundation, a right-leaning think tank in Washington, D.C., released an estimate finding that the Democratic presidential candidate's tax proposals would raise $498 billion in taxes on a "static" basis; that is, without taking into consideration how people would change their behavior in response to the new taxes.
Taking the economic effects of Clinton's proposed tax hikes into account, however, the Tax Foundation estimated that they would raise only $191 billion over the next decade.
Specifically, Clinton's plan for raising taxes on high-income earners would decrease economic output by 1 percent in the long run, according to the Tax Foundation's model. The model is similar to one used by Congress to score the effects of tax legislation, and uses IRS data.
By slowing economic growth, Clinton's tax increases would cost more than 300,000 jobs, and lower wages slightly across the board. The biggest hit would accrue to the top 1 percent of earners, who would bear the brunt of Clinton's proposed rate hikes and other tax increases. They would see their after-tax income fall by nearly 3 percent.
Clinton's tax plans, which represent a variety of different proposals rolled out over the past few months, would feature a four-percentage point "surcharge" on people who earn over $5 million a year.
Beyond raising rates, Clinton would also institute the "Buffett Rule," a policy ensuring that people making over $1 million pay at least 30 percent of their income in taxes, as well as a limitation on the tax deductions that high earners could claim.
Those proposals would raise a lot of revenue: over $500 billion over 10 years, taking economic effects into account.
But Clinton's bid to prevent companies from prioritizing short-term profits over long-term planning by changing the taxation of capital gains would actually lose large amounts of revenue, according to the model. Clinton would raise the top tax rate on short-term capital gains to 47.4 percent, and the top rate on long-term gains to 27.8 percent, up from 23.8 percent today.
In response to those incentives, fewer people would realize short-term capital gains, losing the government over $400 billion in 10 years.
The Tax Foundation has also produced analyses for the tax reform plans submitted by Republican candidates. Clinton's top rival for the Democratic nomination, Vermont Sen. Bernie Sanders, has not yet had his tax proposals modeled.
Reince Priebus, the chairman of the Republican National Committee, seized on the Tax Foundation's study to argue against a Clinton presidency, calling her tax proposals an "absolute disaster."
"Not only do Clinton's tax increases fail to pay for her $1.2 trillion spending spree, they will slow economic growth, drive down wages, and kill the equivalent of hundreds of thousands of full-time jobs," Priebus said in a statement issued after the study's release.