The real-world impact of tax hikes on American jobs

Over the last few weeks, President Barack Obama has adamantly supported raising taxes on corporations and small businesses that employ millions of American workers as a precondition for cutting our bloated federal spending.

To see the real-world effect of this proposal on jobs and the economy, President Obama’s home state provides a useful and cautionary example.

This past January, Illinois Governor Pat Quinn signed into law a 67 percent increase in the state personal income tax rate and a 45 percent increase in the state corporate tax rate. Between its passage and June, Illinois lost 56,223 jobs, according to statistics released last week.

To combat the job loss caused by the higher taxes on businesses, the Illinois Department of Commerce “has already shelled out some $230 million in corporate subsidies to keep more than two dozen companies from fleeing the state.”

So not only is Illinois bleeding productive jobs, but it’s now allowing the government to pick winners and losers.

Extracting an ever-increasing toll from job creators is simply the wrong answer for American jobs. Just ask the 56,000 Illinoisans who have lost their jobs since January. Spreading this failure nationwide is simply not an option.

We are in a debt crisis not because we tax too little, but because Democrat-led Washington spends beyond its means. House Republicans have been focused on encouraging and providing certainty (not new burdens) to our nation’s job creators — and trying to get our debt and deficit-spending under control.

The rest of America simply cannot afford more of the failed policies of the president’s home state, and House Republicans will fight against tax hikes so that we may ensure a brighter future for generations to come.

Congressman Pete Sessions represents Texas’s 32nd Congressional District. Congressman John Shimkus represents Illinois’s 19th Congressional District.

  • clw

    Samac: “Until I see a Republican plan that actually balances the budget in 5-10 years, I will change my mind. But your numbers do not add”.

    Oh really.

    Why the hell should Republicans (and I’m a registered Independent btw) come up with a plan that balances the budget in 5-10 years when the debt incurred by Obama is the largest in history?! He runs up deficits to his hearts content and everyone else is supposed to clean up after him?

    Get serious!

    I live in Obama’s Illinois, which I DETEST. He and other far-left-liberal Democrats have run this state into the ground! They have NO SENSE. One unfunded mnadate after the next, and they could CARE LESS how they get paid for. It’s just tax, tax, tax. Simple-minded IDIOTS minding the store. There will be a HUGE backlash in 2012 here in Illinois, bank on it. 5 of the last seven Illinois governors were jailed for felonies. The only reason Obama escaped that fate was due to yet another Illinois Democrat political scandal where his opponent was ruined and Obama stepped in by default. Not due to any intellect or skill on his part! WE are stuck with the consequences of illiterate voters in this state and nationwide who checked a box for the insanely vague platitude of “hope and change”. Now we pay!

  • samac

    So a hedge fund or private equity manager can still only pay 15% on his income (and defer the taxes forever) while I pay 35% for the sole reason that I don’t earn my living managing other peoples money.

    Under the Ryan plan (which has some good components) these people get to pay 0%!

    How does this make sense again? IT DOESN’T So stop defending it. Subsidizing hedge fund managers does not “Create Jobs”. If anything, this diverts resources to an unproductive, oversized financial sector that becomes a cancer on the real economy. I hate to say it, but the Democrats are right.

    I’m a Republican, but I’m not impressed by your absolutism opposing any revenue increase. It is completely disingenuous, and I worry it is the new flavor of special interest influence- ethanol producers give to Norquist who then keeps their stupid subsidy in place by distorting reality.

    In fact, your stance is not anti-tax. It is pro-taxes in the future. Cowardly, in fact. Until I see a Republican plan that actually balances the budget in 5-10 years, I will change my mind. But your numbers do not add.

    But as long as Norquist and some former staffers pay their Georgetown rent, who cares right?

    • Scrap Iron

      You seem to confuse tax RATE hikes with tax REVENUE hikes.
      Lowering RATES result in increased revenue.
      Also, increasing economic activity gives increased revenue.

      I will applaud your stance on ethanol subsidies. Ethanol, especially from corn, costs too much, and in fact, uses more energy to produce than the final product returns.
      Ethanol from sugar cane is the ONLY way to be profitable in ethanol.
      Even EXXON is working on ethanol from algae. If it works, great, but I don’t see them getting a subsidy for their effort (and they shouldn’t).

      • samac

        Actually you seem to confuse rate hikes with revenue hikes. I support revenue hikes.

        Lowering rates DOES NOT result in increased revenue at the Federal Level.

        Only in rare circumstances can this happen at the Federal level- it happens where a tax is very high and very avoidable.

        The Bush tax cuts DID NOT pay for themselves and those who repeat this are liars. Pure and simple. Even if I agree with them on many principles, they are still liars.

        Lowering the cap gains rate from 15 to 10 definitely costs revenues. Lowering it to 0 costs lots of revenues. Raising it to 20% increases revenue, at a small cost to productivity. This is just a fact. Believing otherwise is delusion. Will raising the cap gains tax to 20% lower revenues? If you believe this, you are an idiot.

        You do see rate increases that decrease revenues sometimes at a state or city level only when it is easy to leave the tax jurisdiction. At the fed level, almost 0 impact. After all, the US is the only real country in the world to tax its citizens on worldwide income regardless of whether they are living in the US. From that perspective, the socialist European countries are freer. US citizens have very little ability to avoid federal taxes legally by moving their wealth or themselves out of the US.

  • Texas Our Texas

    Huge logical leap, Pete and John: you’ve assumed causation. The entire point of your opinion is based on a logic flaw.