August 17, 2009
The Tax Foundation released a Special Report Friday looking at the total economic cost of higher tax rates after the expiration of the 2001 and 2003 tax cuts and factoring in a proposed surtax on the rich to pay for health care reform. The federal government expects to raise $88 billion in 2011 from the higher rates, but the economy will incur a "deadweight loss" of $76 billion, raising the total cost of the tax increases to $164 billion - nearly double what lawmakers intend to raise.
In the following Tax Foundation video, Senior Economist Gerald Prante further explains the deadweight loss - or "excess burden" - of a tax.
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