The analysis concludes Biden’s plan would raise $2.8 trillion over the next decade from higher taxes on businesses, corporations and the wealthiest households. Over that time, AEI projects the higher taxes would reduce economic growth by a relatively modest 0.16 percent.

The plan would “make the tax code more progressive,” AEI’s Kyle Pomerlau and Grant Seiter write. And after slightly crimping growth in its first decade, it would “reduce debt-to-GDP in the second decade, leading to slightly higher GDP. However, in the long term, his plan would not raise enough to stabilize debt-to-GDP and would lead to a 0.18 percent smaller economy.”

The macroeconomic drag the AEI model anticipates roughly aligns with other analyses from the Tax Foundation and the Penn Wharton Budget Model, Pomerlau notes. In other words, rolling back most of the Trump tax cuts wouldn’t bring about the economic Armageddon the Trump campaign has depicted.

Neither would it jack up taxes on every American. 

Vice President Pence made that claim during his debate with Sen. Kamala Harris (D-Calif.),  Biden’s running mate, last week. The AEI analysis finds the top 1 percent of taxpayers would see a 14.2 percent hit to their after-tax income next year. The rest of the top 5 percent would face a small uptick in their burden. But everyone else would receive an after-tax income bump. The largest such increase, of 11.3 percent, would go to the bottom 10 percent, thanks to a temporary expansion of the child tax credit, according to AEI.

The analysis finds that starting in 2030, the Biden plan would impose “modest” tax hikes on the bottom 95 percent of earners, which it attributes to higher taxes on businesses. That would appear to violate Biden’s pledge not to raise taxes on anyone earning less than $400,000

The U.S. Labor Department will announce how many jobs were created in September this Friday, October 2, before the markets open. ADP estimates that the economy added 749,000 jobs in the month, down from 1.37 million in August. This compares to the consensus estimate of 850,000 per Trading Economics (its projection is 915,000) and 800,000 from Capital Economics.

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said, “The labor market continues to recover gradually. In September, the majority of sectors and company sizes experienced gains with trade, transportation and utilities; and manufacturing leading the way. However, small businesses continued to demonstrate slower growth.”

Unemployment claims are still at historical levels

From the Peter G. Peterson Foundation, “Since March 15, 62 million individuals have filed a claim, largely because of the coronavirus (COVID-19) pandemic and measures to mitigate it. In each of the past 27 weeks, more claims have been generated than in any week in history; the pre-pandemic record of 695,000 was set in the week that ended on October 2, 1982.” As can be seen in the chart below for the past four weeks the number of people filing for unemployment has essentially been flat at 900,000 per week.

There have been a number of companies in the past week that have announced layoffs. This will continue to keep new claims at elevated levels.

  • Disney: 28,000
  • Airlines: 40,000 (unless Congress and President Trump agree to a new stimulus package)
  • Shell: 9,000
  • Dow: 6% of its workforce

Additionally there have been 19 million claims for Pandemic Unemployment Assistance or PUA claims. Over the past seven weeks new PAU claims have ranged from 1.5 to 1.8 million.