Hillary Clinton's tax plan would raise hundreds of billions of dollars from the wealthy, but would hamstring economic growth and prevent the creation of nearly 700,000 jobs over the next decade, according to a new analysis released Wednesday.
The Tax Foundation, a nonpartisan think tank in Washington, published a score of Clinton's plans for tax policy that found that it would would raise taxes by $1.4 trillion over the next 10 years, under a static analysis that assumes nothing else changes. That revenue would come from new taxes on high earners, a higher tax rate on multi-million dollar incomes, and new estate taxes.
But because those tax hikes would decrease the incentives to work, invest, and save, the group found, the Democrat's tax proposals would slow economic growth.
One result would be fewer jobs: If Clinton's tax plans became law, the economy would generate 697,000 fewer jobs over the next decade. Wages would also be lower, by more than 2 percent.
The group also said that under a dynamic analysis that assumes the tax hikes change people's behavior, Treasury would not gain the full $1.4 trillion in revenue, because the weaker economy would crimp tax collections. Taking into account the slower economy, Clinton's tax plan would raise only $663 billion over 10 years, it said.
That revenue would not be sufficient to cover the roughly $1.5 trillion in new spending programs, such as tuition-free college for middle-class families, that Clinton has called for.
The Tax Foundation, which generally favors lower tax rates and more business-friendly policies, uses a model similar to one of the models employed by Congress' in-house tax team to evaluate tax changes.
It produced its analysis of Clinton's tax plans Wednesday after the campaign on Tuesday announced a new child tax credit expansion and provided more details of its plans to another think tank, giving a fuller picture of its tax agenda.
Part of the motivation behind Clinton's platform is to tax the rich to pay for programs while providing relief to middle-class families. She would limit tax breaks for high earners, institute the "Buffett Rule" ensuring that incomes of more than $1 million were taxed at a minimum of 30 percent, and levy a new 4 percent surcharge on incomes over $5 million, in addition to broadening the estate tax and lifting the rate as high as 65 percent.
The Tax Foundation analysis suggests that the Clinton tax plans would achieve the goal of targeting the rich, reducing the after-tax income of the top 1 percent of earners by nearly 7 percent, while also providing modest gains for lower tax brackets.
When economic growth is considered, however, every income group would be worse off, because the higher taxes would slow commerce.