Why Vote for a Bill That Lowers GDP During a Recession?

A telling analysis from the Institute for Research on the Economics of Taxation (IRET) on the Obama surtax which will lower GDP and income for all income levels and actually lower the level of taxation:

Economic consequences of the 2.9% rate hike

On a static basis, our preliminary estimate is that the Obama plan’s 2.9% surtax on the capital gains, dividends, interest, and certain other income of upper-middle class and wealthy taxpayers would:

• Raise approximately $39 billion yearly (at 2009 income levels);
• Affect only a small number of upper-income individuals.

In reality, on a dynamic basis, the 2.9% surtax would, after the economy has adjusted to it:

• Depress GDP by about 1.3%;
• Reduce private-sector capital formation by about 3.4%;
• Cut the wage rate by about 1.1%, and hours worked by about 0.2%;
• Reduce the after-tax incomes of the people in the income ranges supposedly not touched by the
• proposed 2.9% surtax by 1.1% - 1.2%;
• Lose about 70% of its anticipated income tax revenue gain due to lower GDP and incomes across-the-board;
• Decrease other federal tax revenues, causing total federal receipts actually to fall by about $5 billion yearly (at 2009 income levels).