Boost the economy by ending tax cuts for the rich

A new report by Josh Bivens and Andrew Fieldhouse of the Economic Policy Institute (EPI) and The Century Foundation (TCF) shows how ending Bush tax cuts for the richest Americans could lead to 2 million more jobs in 2013 and 1.4 million more jobs in 2014.

The EPI/TCF report explains what economists already know about tax cuts for the wealthy—they are extremely ineffective in creating jobs.

EPI and TCF show how we could end these wasteful tax cuts for the wealthy, use half of the savings to reduce the deficit and use the other half to create jobs in much more effective ways.

There is more agreement among economists than you might expect about what works and what does not work when it comes to creating jobs. The report opts for some of the strategies that have proven most effective:

  • Invest in transportation infrastructure and an infrastructure bank.

Result: 237,000 more jobs in 2013. 400,000 more jobs in 2014.

  • Modernize schools and rehire teachers.

Result: 354,000 more jobs in 2013. 135,000 more jobs in 2014.

  • Replace the payroll tax cut with a one-year refundable tax credit.

Result: 502,000 more jobs in 2013.

  • Expand the unemployment insurance (UI) program and continue for three years.

Result: 539,000 more jobs in 2013. 524,000 more jobs in 2014.

  • Provide direct fiscal relief to distressed state governments for three years.

Result: 495,000 more jobs in 2013. 378,000 more jobs in 2014.

The EPI/TCF plan would not only boost economic output by 1.7% in 2013 and 1.1% in 2014, but it also would reduce the deficit by $651 billion over 10 years.

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