It now appears that the folks in Washington can't even manage a tax increase. From the Tax Foundation:
The outcome of this will be an even greater drag on entrepreneurial activity over the years to come.
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. According to a new analysis from the Tax Foundation, 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.
Tax Foundation Special Report No. 170, "The Excess Burden of Taxes and the Economic Cost of High Tax Rates," attempts to put a price tag on the cost of pending rollbacks of the Bush tax cuts (which would raise the top tax rate to 39.6%) as well as the proposed health care surtax (ranging from 1% to 5.4%). This loss in economic efficiency is also known as the "excess burden" or "deadweight loss" of taxes--the income that would need to be given to people to compensate them for the resources that are lost due to the distorting effect of taxes.
The outcome of this will be an even greater drag on entrepreneurial activity over the years to come.
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