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Nov 2, 2020 1 min read

What The Media Hasn't Told You About the Biden "Tax Plan"

What The Media Hasn't Told You About the Biden "Tax Plan"

Four economists at the Hoover Institute conducted a study to examine Joe Biden's economic and tax plans. Here's what they found.

The Long-Term Effect

  1. Reduce full-time equivalent employment per person by about 3%
  2. Reduce the capital stock per person by about 15%
  3. Reduce Real GDP per capita by more than 8%
  4. Reduce real consumption per household about 7%

Sources: Hoover Institute, WallStreetJournal

What This Means

  1. There will be 4.9 million fewer employed individuals
  2. $2.6 trillion less in GDP
  3. $1.5 trillion less consumption in that year alone...
  4. Median household income in 2030 would be $6,500 less

Sources: Hoover Institute, WallStreetJournal

The Biden Tax Agenda

Increases in the business tax rates would come primarily from three proposed changes:

  • Raising the corporate tax rate to 28%
  • Phasing out the qualified business income (QBI) deduction
  • Extending the payroll tax to income above $400,000

Bien's agenda reduces capital intensity by increasing average marginal tax rates on capital.

Sources: Hoover Institute, WallStreetJournal

What That Agenda Means

"73% of firms which employ more than 40 million workers would face a tax increase" - Hoover Institute

The effect on total employment range from a low of 31%in Hawaii to 51% in Idaho.

Sources: Hoover Institute, WallStreetJournal

Biden's 'Environmental' Plan

Transportation and electricity industries will require more inputs, 1.3 million net additional energy workers, to produce the same outputs because of Biden's plans to further cut the nation's carbon emissions by wholly eliminating industries.

Because these industries are a nontrivial share of the overall economy, that means 1-2% less total factor productivity overall. These effects would be significantly larger if the energy goals are taken literally.

Sources: Hoover Institute, WallStreetJournal

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