Several weeks ago, presidential candidate Hillary Clinton spoke to an audience in Warren, Michigan laying out her plans for the economy should she become president. She asked four questions of her audience, of which the first was: “Which candidate has a real plan to create good-paying jobs?” Evidently, not Hillary Clinton.
Her plan for taxing the rich to create a “fair” economy looks like a populist’s dream on paper, but two National Center for Policy Analysis studies found that her economic plan would simply continue along the same dismal track of the current administration — except worse. Her effort to redistribute income will mean hiking capital gains taxes for high-income earners, imposing a 30 percent effective tax rate on households earning $1 million or more (the “Buffet rule”), and a 4 percent surcharge on multi-millionaires.
Hillary’s Plan Hurts Everyone, Not Just the Rich
Many who just read that paragraph will think Okay, it’s those rich people, and it doesn’t apply to me. True, the tax changes themselves would have little effect on tax liabilities for 90 percent of Americans. Households in the top 10 percent of the income distribution, who currently pay 53 percent of all federal taxes, would pay 80 percent of the additional tax collected.
But nothing happens in a vacuum, and Hillary should know better. When compared to the Congressional Budget Office’s (CBO’s) baseline estimates, broadly measured income — which includes wage income, some tax-exempt sources of income, and employer contributions to health insurance premiums — would fall for every income decile except one.
Let me repeat that: nine out of 10 income deciles, including the bottom 10 percent of earners, would be slightly worse off under Hillary’s plan than the status quo. Of the bottom 90 percent of earners, the bottom 10 percent would experience the largest drop in broad income of almost 1 percent. While this decline may be insignificant to the wealthy, it means something to a family trying to make ends meet.
How can this be? Isn’t Hillary’s economy supposed to be an economy that works for all? Maybe not. In another study of her plan’s effect on the economy as whole, our NCPA analysis found her reforms would generate 49,000 new government jobs in 2017, but at a loss of 207,000 private-sector jobs compared to the CBO’s baseline estimate. In other words, Hillary’s plan would kill four private-sector jobs to create one public-sector job.
Killing Private Jobs to Pad Bureaucracy
In the long-term, in 2026, the cost would be even greater: one government job would cost five private-sector jobs. If Hillary wants to go to bat for working families, as she claims, these families would have to be working. Yet it doesn’t look good for them. Our studies show that Hillary’s plan would cause business investment to fall $19 billion in 2017 alone, about 0.7 percent less than CBO estimates. Without business investment, there is no job growth for the middle class. In fact, so many fewer people will be working in a Hillary Clinton economy that Social Security payroll tax revenues would fall under her plan by $47 billion over 10 years, leaving a severely underfunded program in even worse shape.
“What we have here is a plan to destroy hundreds of thousands of private-sector jobs just to pad government payrolls, while, in the process, doing almost nothing to improve tax fairness,” said David Tuerck, co-author of the NCPA study and executive director of the Beacon Hill Institute in Boston.
Clinton’s plan would raise an additional $615 billion in tax revenues over 10 years, most of it coming from increases in the personal income tax. But it won’t cover the estimated $1 trillion in pet projects she has in mind, including another round of stimulus for infrastructure and green jobs. News flash: It didn’t work when President Obama tried, and it surely won’t work again.
Hillary’s tax plan mirrors misguided Keynesian practices and redistributionist policies that have grown the economy at a snail’s pace for the past eight years. Suffice it to say she will surround herself with bureaucrats ready to hand out “shovel-ready” jobs at taxpayers’ expense, while the economy drags on and the national debt grows.