In his WSJ column James Freeman mentions the Tax Foundation’s recent assessment of the Biden Administration’s American Jobs Plan:
The White House doesn’t seem to understand that most productivity-enhancing infrastructure is built by business, and when corporate taxes rise, businesses have an incentive to build less of it. The Tax Foundation explains that government spending giveth less investment than the new taxes would taketh away:
We estimate the infrastructure spending would increase long-run GDP by 0.3 percent, but this positive economic effect is entirely offset by the increase in corporate taxation, resulting in less corporate investment which reduces GDP by 0.5 percent in the long run, reduces wages by 0.5 percent, and eliminates 101,000 full-time equivalent jobs.
That’s an example of the deadweight loss I keep harping on.
And they don’t even mention that in order to stimulate the U. S. economy using a Keynesian strategy rather than those of Germany, China, or Japan (or Canada or Mexico) we’d need to produce a lot more of what we consume here. That would make the BANANAs whose support President Biden needs to pass his agenda’s heads explode.
