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![handle is hein.taxfoundation/iretpbul0029 and id is 1 raw text is: March 26, 1997
No. 70
TAX INCREASES BY ANY OTHER NAME
Along with the much publicized tax reductions in its budget plan, the Administration is including
a long list of proposed tax increases. Although the President did not mention the tax increases even
once in his State of the Union speech, they are not puny - $76 billion from 1998 through 2002.
Some would extend expiring or expired tax provisions; many, the Administration declares, would
close supposed corporate tax loopholes or correct other abuses. Most are directed at investment
income and generally would be collected at the business level. By and large, these proposals were
made by the Administration last year but rejected by Congress then.'
One Clinton Administration source is quoted as claiming the tax increases targeted at supposed
loopholes would actually help the economy.2 According to the source, the proposals, if enacted,
would reallocate resources from tax-avoidance activities to business activity.3
In economic analysis, higher taxes on investment income weaken investment by undercutting
investment incentives; people are not as eager to invest when higher taxes reduce their after-tax
returns. The Administration claims its recommended tax hikes are different. Supposedly, the
revenue raisers would ferret out what a senior Administration official describes as corporate [tax]
loopholes and unwarranted [tax] subsidies.,4 In the budget documents it has submitted, the
Administration says of its proposals, The budget eliminates or shrinks a wide range of tax loopholes
and preferences that are no longer warranted... Restricting them would help balance the budget,
' See Michael Schuyler, False Charges of Corporate Welfare Fuel Administration Tax Hike Proposals, IRET
Policy Bulletin No. 66, June 1996 and Michael Schuyler, The Clinton Economic Plan: Contingent Promises and Hidden
Burdens, IRET Policy Bulletin No. 69, October 1996.
2 Clay Chandler, Corporate Tax Plan Readied, The Washington Post, January 31, 1997, p. A8.
3 Ibid.
4 Ibid.
Institute for
Research
on the
Economics of
Taxation
IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational
organization devoted to informing the public about policies that will promote
economic growth and efficient operation of the market economy.
1730 K Street, N.W., Suite 910 e Washington, D.C. 20006
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