The Effect of the Candidates' Tax Plans on Jobs

Blog Post - The Effect of the Candidates' Tax Plans on Jobs

A comparison of the presidential candidates' tax plans reveals just how important this election will be, as their fundamentally different approaches to tax policy will result in a huge difference in jobs created.

Clinton's plan would have the most negative impact, by far. Because it would enact a number of tax policies that would raise higher marginal tax rates on capital and labor income, it would would reduce economic activity and the economy’s size would be 1% lower than existing law, resulting in 311,000 fewer full-time equivalent jobs.

Trump, on the other hand, would give a boost to the economy by doing the opposite. He would substantially lower individual income taxes and the corporate income tax and eliminate a number of complex features in the current tax code. According to the Tax Foundation’s Taxes and Growth Model, the plan would reduce the cost of doing business by decreasing taxes on labor and capital, thereby increasing GDP by 11% over existing law with 5.3 million additional full-time jobs being created.

In other words, the difference between the tax plans for the the two candidates is so great that we would likely see a staggering 7 million net difference in job growth between them.

Note: Methodology can be found here.

Comment list

  • Mike Napolitano
    29-Jul-2016 11:25 PM

    What are the expected impact of the Johnson and Stein plans? Based on the current polling, with Johnson expected to be at the debates, it is relevant to at least understand if his policy plans are sound or not.

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