In an op-ed published in today’s Financial Times, Martin Feldstein, President Ronald Reagan’s chief economic adviser, warns that if Washington Democrats get their way and impose a $2 trillion tax hike, it “would push the US into a new and deep recession next year”:
“Looking to the future, there are strong headwinds that will make it difficult to achieve a robust recovery....[T]he most important cloud on the horizon is the large tax increase that will occur next year unless legislation is passed to block it….
“The higher revenue would reflect an increase in personal tax rates, higher payroll taxes, as well as higher taxes on dividends, capital gains and corporate incomes. Revenue would continue to rise in future years – as a share of GDP it would increase to 19.8 per cent in 2014 and would stay above 20 per cent for the remainder of the decade. A sustained tax increase of that magnitude would push the US into a new and deep recession next year...
“The risk of dramatic tax increases and an economic downturn next year affects the behaviour of businesses and households today. Companies that expect large tax hikes in 2013 and potentially another downturn in the near future will be reluctant to invest or hire this year. And individuals who think their personal taxes may rise next year will also cut back on current spending on ‘big ticket’ and other discretionary items.”
Feldstein goes on to note that “America needs to reform its tax rules and entitlement programmes.”
Thankfully for Americans concerned about the explosion of debt and spending in Washington under Democrat rule, House Republicans have offered a pro-growth budget proposal that reins in spending, reforms our tax code and protects and preserves Medicare for current and future retirees.
In contrast, today marks the 1,056th day since the Senate Democrats have passed a budget, and the White House continues to push for more spending, followed by higher taxes – a recipe that will only hurt economic growth and job creation.
Americans deserve better than what Washington Democrats are offering. House Republicans have a better solution: the GOP’s “Path to Prosperity.” Read more about it here.
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