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Sagot :
People pay more in taxes when the government raises the income tax rate, leaving them with less money to spend on goods and services.
The government can alter the amount of money spent in the economy by changing the tax rate because taxes lower income and income influences spending. "A stream of spending proposals that would help the economy would be funded by tax increases now, which would accelerate growth." Thus, it appears that raising tax rates would benefit the economy because they could fund new programs. However, Douglas Holtz Eakin made the observation that "the taxes are bad but all the better news for growth, if there is any, is in the spending proposals," as he put it. This indicates that, regardless of how the revenue would be spent, tax increases for businesses and higher earners would harm the economy.
In point of fact, negative effects on the economy are found in all major analyses of Biden's tax plan. According to the Tax Foundation model, his tax plan would result in a long-term productivity output decrease of nearly 1.5%. While the direction does not change between estimates, the magnitude does change depending on various factors, like how open the economy is.
Companies would be less competitive and would pay more to invest in the United States as a result of that tax increase. This would not only burden workers but also discourage investment for a nascent economic recovery when additional investment is required. Workers would shoulder half of the long-term cost of the corporate tax increase, according to estimates. According to the Congressional Budget Office, workers will bear a quarter of the corporate income tax burden.
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