Democratic presidential nominee Joe Biden’s tax and regulatory plan would act as a tax increase on the middle class, a new study revealed.
“The middle class ‘taxes’ come in the form of higher prices for energy, prescription drugs, autos, health insurance, internet service, and more,” Casey B. Mulligan, one of the study’s authors and a former economic adviser to President Trump, told the Washington Examiner.
When asked if that meant middle-class consumers would be forced to subsidize Biden’s economic agenda, not through a direct increase in taxes, but by being forced to pay higher prices as a result of Biden’s tax and regulatory plan, Mulligan confirmed that would be the case.
The healthcare market would be one area where middle-class consumers would be hit hardest, as Biden plans to expand subsidies for health insurance plans provided through the Affordable Care Act, the study found.
“Because subsidies are withheld on the basis of full-time employment, they are an implicit tax on full-time employment,” the study’s authors said. “Because they are also withheld on the basis of family income, they are also an implicit tax on income.”
“We show how both of these implicit tax rates are increased by Biden’s plans, primarily because the subsidies become more generous,” the study continued.
“We estimate that the combination of these ACA modifications resembles an increase in the average marginal labor income taxes rates of 2.4 percentage points,” the study said. “These higher rates contribute significantly to our estimates of the labor market effects of Biden’s policy proposals.”
Overall, the study found the economic impact of Biden’s proposals would be drastic.
“We conclude that in the long run, Biden’s agenda would reduce full time equivalent employment per person by about 3 percent, and real consumption by about 7 percent,” the study’s authors said, using the Congressional Budget Office’s 2030 projections for comparison.
“This suggests there will be 4.9 million fewer employed individuals, $2.6 trillion less in GDP, and $1.5 trillion less consumption in that year alone,” the study continued. “Median household income in 2030 would be $6,500 less.”
Mulligan, who is also a University of Chicago professor, authored the study along with Kevin Hassett, a former White House economist who is now at Stanford University’s Hoover Institution, Timothy Fitzgerald, and Cody Kallen. Together, they examined the impact of Biden’s policy proposals in four areas: taxation, health insurance, regulation, and energy policy.
Mulligan believes the effect of a return to former President Barack Obama-era regulations, which Trump has steadily rolled back during his first term, would lead to manufacturing work to move elsewhere.
“The regulatory burden will encourage manufacturing work to be done outside the country and service work done here instead,” Mulligan said.
The study concluded that more attention should be paid to the economic effects of Biden’s policy proposals.
“While these effects may seem large, they are actually conservative estimates of the negative impact of the full Biden agenda,” the study said.
“Economists have paid little attention to the economic effects of the Biden plan as a whole,” the study stated. “This report suggests that these effects are potentially very large indeed.”
