Dr. Robert Carroll and Gerald Prante of Ernst & Young authored this new study examining the economic impact of the higher tax rates advocated by the President and some in Congress on high-income taxpayers. The study uses a model to find that raising tax rates on those earning more than $250,000 would have the following effect over time:
- Fewer jobs—710,000 fewer jobs;
- Lower wages—1.8 percent lower;
- Less investment—2.4 percent less; and
- A smaller economy—1.3 percent smaller.
The White House has responded to this study. Boiled down, the White House raises six key points of disagreement. Those criticisms and our response can be found here.