Report from anti-tax group warns that $3.5 trillion spending plan would hit economic output, hurt savings

FIRST ON FOX: A new report from a conservative anti-tax group is warning of a massive loss in economic output and a significant hit to middle-class families if the tax hikes that accompany a $3.5 trillion Democratic spending proposal is signed into law.

"Copying European-style fiscal policy will produce European-style economic weakness, particularly when considering that much of Biden’s new redistribution spending will discourage work and much of Biden’s class warfare tax increases will penalize saving, investment, and entrepreneurship," a new report by The Club for Growth says.

CONSERVATIVE GROUP LAUNCHES MULTI-MILLION DOLLARS PUSH TO DETAIL DEMS' $3.5 TRILLION SPENDING PLAN

While much of the debate around the bill has focused on the spending side, the group is trying to raise awareness of the tax plan that is in the bill. The report warns that the proposal would result in the U.S. having the highest corporate tax rate and the highest capital gains tax rate in the developed world.

"The bottom line is that the President’s tax-and-spend agenda repeats the mistakes of nations such as France, Italy, and Greece," it finds. "Those nations suffer from slower growth, higher unemployment, and lower living standards, in large part because of bad fiscal policy."

The report predicts a loss of $3 trillion of economic output over the next 10 years, a loss of $1.6 trillion of worker compensation over the next 10 years, a loss of more than $10,000 on average in worker compensation and a lifetime drop in living standards of 4% for young workers.

"It’s a disaster for economic growth. GDP slows down, fewer jobs and significantly for families, drops in income over the next 10 years as well," Club for Growth President David McIntosh told Fox Business in an interview.

McIntosh also argued that a new round of taxes would be especially painful given the state of the economy and the continued COVID-19 pandemic.

‘As we’re continuing to come out of the shutdowns from the first round of COVID and some places having to restrict activity again with the Delta virus and who knows what happens next year, the economy is in a precarious position," he said.

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The report comes as Democrats try and move forward with a budget reconciliation bill scooping together a number of their spending and other policy priorities. A budget reconciliation bill only needs 50 votes in the Senate, and therefore would not need any Republican support. It would need a majority in the House too, where Democrats have only a slim majority and cannot afford many defections.

Conservative groups like Club for Growth are trying to peel off more moderate Democrats, who have balked at the size of the spending package, along with the massive tax increases it would entail.

Club for Growth told Fox Business last week that it will spend $300,000 to run ads on TV and digital for one week in 10 key districts targeting moderate Democrats who face tough re-election challenges, the first phase of a $2 million effort to oppose the Democrats’ wide ranging social spending package.

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The group says it is also running ads praising those Democrats who buck their party and oppose the bill.

"It's tagged at moderate Democrats who don't like the social programs and kind of socialist approach on spending or taxes but are being whipped into shape by the leadership -- and our goal is to generate support back home for them standing tall," McIntosh said.

Fox News' Paul Steinhauser contributed to this report.