The Tax Foundation released a Special Report Friday looking at the total economic cost of higher tax rates after the expiration of the 2001 and 2003 tax cuts and factoring in a proposed surtax on the rich to pay for health care reform. The federal government expects to raise $88 billion in 2011 from the higher rates, but the economy will incur a "deadweight loss" of $76 billion, raising the total cost of the tax increases to $164 billion - nearly double what lawmakers intend to raise.
In the following Tax Foundation video, Senior Economist Gerald Prante further explains the deadweight loss - or "excess burden" - of a tax.
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.
Disclaimer: All views expressed on the Tax Foundation’s Tax Policy Blog are those of the individual authors, and do not necessarily represent the views of the Tax Foundation, its Board of Directors, or its financial contributors. The Tax Foundation makes no representation concerning the views expressed, and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented.
