Thanks. Here is a direct link to the study for those who question the source.
It is funny. To me this has been so obvious since high school when I argued with young, liberal social studies teachers that corporations that provide jobs should not be taxed... tax the workers and or total sales instead.
hoover.org
VIII. Conclusions
We reach three key conclusions as to the effects of Vice President Biden’s full policy agenda
on tax and productivity wedges. First, transportation and electricity will require a lot more
inputs (including 1.3 million net additional energy workers) to produce the same outputs
due to Vice President Biden’s ambitious plans to further cut the nation’s carbon emissions.
Because these industries are a nontrivial share of the overall economy, that means one or
two percent less total factor productivity overall. These affects would be significantly larger
– likely dwarfing the (nontrivial) rest of the agenda – and speculative if the energy goals
are taken literally, which we do not. The costs would also be concentrated geographically.
Second, labor wedges are increased by proposed changes to regulation as well as to the ACA.
Our quantitative findings for the ACA should be no surprise given what had been found for
previous efforts in the U.S. and other countries to expand health insurance coverage. Third,
Vice President Biden’s agenda reduces capital intensity by increasing average marginal tax
rates on capital income.
We then assume, as many growth models do, that the supply of capital is elastic in the
long run to its after-tax return and that the substitution effect of wages on labor supply is
nontrivial. We conclude that, in the long run, Vice President Biden’s full agenda reduces
full-time equivalent employment per person by about 3 percent, the capital stock per person
by about 15 percent, real GDP per capita by more than 8 percent, and real consumption per
household by about 7 percent. Relative to the CBO’s 2030 projections for these variables, this suggests there will be 4.9 million fewer employed individuals, $2.6 trillion less GDP,
and $1.5 trillion less consumption in that year alone. Median household income in
2030 would be $6,500 less. The projections are conservative in terms of the sensitivity
of wages and average productivity to the after-tax share of capital income (Barro and
Furman 2018 assume about twice as much), our treatment of business and labor regulation
as redistributive versus resource using, and the ambitions of Biden’s agendas for health
insurance, energy, and climate. On the other hand, the economic effects could be less if the
agenda is only partially implemented. |
