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Tax Foundation is estimating that about 30,000 jobs would be eliminated by the Manchin-Schumer Democratic led inflation tax hikes.
On Tuesday the
nonpartisan group which generally favors lower taxes released analysis about the
legislation championed by Sens. Joe Manchin (D-WV) and Chuck Schumer (D-NY),
Washington Examiner reports.
The group estimates
that the tax changes-the biggest of which would be 15% minimum tax on a company’s
book income, higher taxes on the carried interest income earned by private
equity firms, and additional funding for the IRS – would result in a net loss
of jobs and would likely have negligible effects on inflation, Washington
Examiner reported.
Inflation Reduction Act could reduce GDP by 0.1%, slash 30,000 jobs - Tax Foundation
The tax hike
bill dubbed the Inflation Reduction Act, would reduce in the long-run gross
domestic product output by about 0.1% and slash roughly 30,000 full-time
equivalent jobs in the United States, Washington Examiner cited the report.
The modeling
done by the group revealed that the Democratic plan would decrease wages by
about 0.1% and raise just under $300 billion in net revenue.
The Manchin-Schumer
legislative proposal would levy a 15% minimum tax on the book income of
companies, according to Washington Examiner.
Washington
Examiner reported that the plan would assess a minimum 15% tax on the adjusted
financial statement income of corporations, which Democrats project would raise
$313 billion in new tax revenue. The U.S. with a 21% corporate tax rate would
only realize $234 billion from the measure way below the projected 313 billion
proposed by the Joint Committee on Taxation (JCT).
Manchin-Schumer deal includes hiking taxes on carried interest
The Manchin-Schumer
proposal also includes hiking taxes on carried interest, a form of income
earned by private equity funds that is subject to a lower tax rate, according
to Washington Examiner. The modeling
found that its effect on inflation is particularly uncertain, noting it would “likely
close to zero” in sharp contrast with the Democratic legislation that
highlights inflation reduction as a key priority of the measure.
Both
Democrats and Republicans are evenly split on the legislation. Most Republicans
have criticized the minimum book income tax, arguing it will hike takes for the
middle class and harm U.S. manufacturers. The JCT found that people in every
tax bracket would suffer loses because of increased taxes on corporations.
“To the
extent the durability of the bill’s provisions are in doubt — that is, due to
the lack of bipartisan support — it may have little impact on expectations
about the fiscal outlook and therefore inflation,” said Garrett Watson, senior
policy analyst at the Tax Foundation, according to Washington Examiner. “On
balance, the long-run impact on inflation is particularly uncertain but likely
close to zero.”