The following letter is co-signed by 185 of the nation's economists including Dr. Sanjai Bhagat, Provost Professor of Finance, University of Colorado, and Contributing Editor to A Line of Sight. http://sanjaibhagat.com
Further information is available from the National Taxpayers Union, click here
An Open Letter to Congress:
December 11, 2012
Dear Members of Congress:
As the nation approaches the so-called "fiscal cliff," we, the undersigned economists, urge Congress to carefully consider the relative merits of tax increases and spending restraint. Increasing taxes would likely slow or reverse our nation's fragile economic recovery and undermine long-term growth. Restraining the growth of expenditures, however, would help stabilize the government's fiscal imbalance and create a more conducive environment for robust expansion.
Some in Congress have advocated allowing the 2001 and 2003 taxpayer relief laws to expire for some or all taxpayers. Such an action would have a significant, negative impact on the economy. Low taxes can have a constructive economic effect by keeping money in the private sector, where it is far more likely to be utilized for efficient purposes. By contrast, raising taxes would divert resources into the relatively inefficient public sector, thereby curbing potential job creation and economic growth. This effect would be even more pronounced during a persistent slump.
In particular, Congress should avoid raising marginal tax rates on income and taxes on investment, such as capital gains and dividends taxes. These types of taxes most directly and meaningfully affect job creation.
Additionally, lawmakers must resist other destructive proposals that would boost effective tax burdens, such as curtailing itemized deductions for higher earners or imposing discriminatory taxes on energy or other industries. Such policies are merely revenue-raising ploys when executed outside the context of comprehensive tax reform that includes correspondingly lower marginal rates. And like other tax increases, they would serve as inadequate substitutes to much-needed spending restraint.