The study by the National Association of Manufacturers (NAM), led by Rice University economists, found Biden’s infrastructure bill would cause a barrage of negative outcomes. Biden has called for a corporate tax increase to 28 percent from the current 21 percent.
“This study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs. One million jobs would be lost in the first two years, to be exact,” NAM President and CEO Jay Timmons said in a statement on April 8.
The study assessed the results of increasing the corporate tax rate, increasing the top marginal tax rate, abolishing the 20 percent pass-through deduction, reducing certain expensing provisions, and other actions described in Biden’s infrastructure proposal.
Other results include the GDP shrinking by $117 billion by 2023, $190 billion in 2026, and $119 billion in 2031.
Total employment, which is monitored by the number of hours worked, would also fall by 0.7 percent initially before moderating. The reduction in hours worked equals an employment loss of 1 million full-time jobs in 2023. By 2026, these jobs would still be gone before later stabilizing.
According to the study, the average annual reduction in employment would be equivalent to a loss of 600,000 jobs each year over 10 years. Ordinary capital, or investments in equipment and structures, would meanwhile “be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively.”
After quite some time, the researchers discovered that real wages would fall by 0.6 percent and total labor compensation, including wages and benefits, would decline by 0.6 percent initially before falling by 0.3 percent after 10 years. The total compensation, in the long run, would also decline by 0.6 percent.
Biden’s extensive bill, which its features were described in a fact sheet published by the White House on March 31, is the first part of a two-part economic plan he aims to pass through Congress in the coming months. The second part of his plan starts even more goals outside of the traditional infrastructure scope, such as expanding health insurance coverage, extending the expanded child tax benefit, and more.
Some economists have slammed the package as failing to deliver on traditional funding, and that it accumulates to a large federal power grab. They also found an error with the administration’s broad definition of infrastructure.
When Biden first explained his infrastructure plan last week, he pitched it as “a once-in-a-generation investment in America, unlike anything we’ve seen or done since we built the interstate highway system and the space race decades ago.”