When America’s Fiscal Crisis Hits, Be Forewarned that Tax Increases Will Make a Bad Situation Worse

In addition to the core results, the authors explain why tax-based austerity packages are bad for capital and why tax-based austerity packages are bad for labor.

Since capital and labor are the two factors of production, the obvious and inevitable conclusion is that the economy does worse when taxes are higher.

The study also makes a critical point about the futility of tax increases when the burden of government spending is rising faster than the private sector. Simply stated, that's a recipe for ever-increasing taxes, sort of like a dog chasing its tail.