Growls

We previously growled (Part I and Part II) about the "American Jobs Act" that President Obama proposed in a speech he made September 8, 2011 to a joint session of Congress. In a news release yesterday, the Tax Foundation reported that "a review of the academic literature suggests that the proposed policies will have little, if any, impact. Indeed, because these temporary tax measures would be offset by some $460 billion in permanent tax increases, the whole package could end up doing much more economic harm than good."

The study (Fiscal Fact No. 283; and here in Adobe) points out the act "includes more than $250 billion in tax credits and incentives that are intended to induce more hiring and spur more consumer and business spending.  The remainder of the package is dedicated to new spending on infrastructure and "make-work" projects." The study concludes this way:

"The American Jobs Act is intended to be an ambitious proposal to spur new hiring and generate economic growth. But the economic research suggests that its core tax incentives will have little, if any, impact on either job creation or improved GDP growth. Moreover, whatever meager benefits come from these temporary provisions will be swamped by the long-term impact of the permanent tax increases that are nearly twice the size of the tax cuts.

"Lawmakers should stop trying to jump-start the economy in the short run and begin crafting policies that set the country on a long-term growth path. The economic evidence suggests that cutting our corporate and personal income tax rates while broadening the tax base would greatly improve the nation's prospects for long-term GDP growth while helping to restore Washington's fiscal health. More importantly, these measures will lead to higher wages and better living standards for American citizens. And that should be the number one priority of any tax policy."

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