Tax Foundation Senior Fellow Bob Carroll, Ph.D., spoke on a Heritage Foundation panel yesterday on the economic consequences of the House Ways and Means Committee’s proposed tax increases to pay for health care reform. Bob discussed his research on the additional burden government imposes on economic activity through higher tax rates. The actual economic costs of the proposed health care surtax and the expiration of the 2001 and 2003 tax cuts will be twice the amount of revenue the government intends to collect. The higher tax rates are estimated to raise $88 billion in 2011, but the economy will incur an additional burden of $76 billion — or “deadweight loss” — as a result, which raises the total cost of the tax increases to $164 billion, roughly double what lawmakers intend to raise, according to Carroll. Also speaking on the panel was Karen Campbell, Ph.D., a policy analyst in macroeconomics at Heritage’s Center for Data Analysis. Campbell recently authored a paper on how much the economy will shrink if a high-income surtax is passed. GDP would decline by more than $68.2 billion by 2019 and personal disposable income for a family of four would fall by nearly $1,000, or enough for two annual checkups for the entire family, according to Campbell. Click below to see a video of the entire discussion.
