CHART: Tax Rates vs. Economic Growth

[lakhota]

CHART: Since 1950, Lower Top Tax Rates Have Coincided With Weaker Economic Growth

Ever since President Obama was on the campaign trail, he has been derided by Republicans for vowing to allow the Bush tax cuts for the richest two percent of Americans to expire. And that’s because, to Republicans, there are few things more important than the top marginal tax rate. And to hear Republicans tell it, marginal tax rates are the be-all and end-all of economic growth.

“We’ve seen over the last 30 years that lower marginal tax rates have led to a growing economy, more employment and more people paying taxes,” said Speaker of the House John Boehner. “We also need to just cut the top marginal rate for individuals and corporations so that we’re more competitive and companies can look way out in the future and know they’ll have a competitive tax rate,” said Sen. Jim DeMint (R-SC). “The economics profession has been really clear about this – higher marginal tax rates create a drag on economic growth,” added House Budget Committee Chairman Paul Ryan (R-WI).

But is the data as clear as Ryan suggests? In fact, as Michael Linden, Director of Tax and Budget Policy at the Center for American Progress, found, “growth was actually fastest in years with relatively high top marginal tax rates”:

Back in the 1950s, when the top marginal tax rate was more than 90 percent, real annual growth averaged more than 4 percent. During the last eight years, when the top marginal rate was just 35 percent, real growth was less than half that. Altogether, in years when the top marginal rate was lower than 39.6 percent — the top rate during the 1990s — annual real growth averaged 2.1 percent. In years when the rate was 39.6 percent or higher, real growth averaged 3.8 percent. The pattern is the same regardless of threshold. Take 50 percent, for example. Growth in years when the tax rate was less than 50 percent averaged 2.7 percent. In years with tax rates at or more than 50 percent, growth was 3.7 percent.



As Linden put it, “these numbers do not mean that higher rates necessarily lead to higher growth. But the central tenet of modern conservative economics is that a lower top marginal tax rate will result in more growth, and these numbers do show conclusively that history has not been kind to that theory.” Indeed, these numbers put the lie to the common Republican refrain that Obama and Democrats in Congress are trying to implement a “job-killing tax hike” by putting the top tax rate back to where it was under President Clinton.

thinkprogress.org/economy/2011/06/20/249061/chart-taxes-economic-growth/

NOTE: Article contains supporting links.

[lakhota]

As Linden put it, “these numbers do not mean that higher rates necessarily lead to higher growth. But the central tenet of modern conservative economics is that a lower top marginal tax rate will result in more growth, and these numbers do show conclusively that history has not been kind to that theory.” Indeed, these numbers put the lie to the common Republican refrain that Obama and Democrats in Congress are trying to implement a “job-killing tax hike” by putting the top tax rate back to where it was under President Clinton.

Gee, I wonder why this thread ain't gettin' much action from the righties...?

[❤ mollymouser ❤]

Some of us don't like monochromatic linear charts. I'm more a multi-hued pie chart kind-of-gal, personally. ;D

[❤ mollymouser ❤]

Example: ;D

[lakhota]

Thank you for your usual high-level input.

[❤ mollymouser ❤]

[lakhota]

[ed1066]

Jun 20, 2011 23:40:13 GMT -5 @lakhota said:

Thank you for your usual high-level input.

Pretty ironic coming from a reposter...

Try ANY level of input Lakhota, you might like it...

[Savoir Faire-Demogague in NJ]

The devil is in the details. The chart in post 1 is bogus and ignores and does not factor in increasing govt involvement and mandates in the economy, and completely leaves out exponential growth of govt social programs that are bankrupting the country.

[lakhota]

Jun 21, 2011 18:54:44 GMT -5 Savoir Faire-Demogague in NJ said:

The devil is in the details. The chart in post 1 is bogus and ignores and does not factor in increasing govt involvement and mandates in the economy, and completely leaves out exponential growth of govt social programs that are bankrupting the country.

In other words, it must be a lying Liberal chart...

[floodofsantorum]

This is not a surprising chart. The main thing that holds economic growth down is budget deficits. Cutting taxes raises budget deficits. I know that conservatives talk about spending cuts, but when push comes to shove, like 2000-2006, they spend like drunken sailors.

[lakhota]

Overworked America: 12 Charts that Will Make Your Blood Boil

Why "efficiency" and "productivity" really mean more profits for corporations and less sanity for you.

In the past 20 years, the US economy has grown nearly 60 percent. This huge increase in productivity is partly due to automation, the internet, and other improvements in efficiency. But it's also the result of Americans working harder—often without a big boost to their bottom lines. Oh, and meanwhile, corporate profits are up 20 percent. (Also read our essay on the great speedup and harrowing first-person tales of overwork.)

More: motherjones.com/politics/2011/06/speedup-americans-working-harder-charts

[floodofsantorum]

Jun 21, 2011 19:30:27 GMT -5 @lakhota said:

Overworked America: 12 Charts that Will Make Your Blood Boil

Why "efficiency" and "productivity" really mean more profits for corporations and less sanity for you.

In the past 20 years, the US economy has grown nearly 60 percent. This huge increase in productivity is partly due to automation, the internet, and other improvements in efficiency. But it's also the result of Americans working harder—often without a big boost to their bottom lines. Oh, and meanwhile, corporate profits are up 20 percent. (Also read our essay on the great speedup and harrowing first-person tales of overwork.)

More: motherjones.com/politics/2011/06/speedup-americans-working-harder-charts

The last 30 years also had massive union busting.

I cannot complain though. I got rich working for large corporations, often improving efficiency.

[djAdvocate]

Jun 21, 2011 18:54:44 GMT -5 Savoir Faire-Demogague in NJ said:

The devil is in the details. The chart in post 1 is bogus and ignores and does not factor in increasing govt involvement and mandates in the economy, and completely leaves out exponential growth of govt social programs that are bankrupting the country.

one would think that the massive debt would stifle growth.

apparently that is not true.

[floodofsantorum]

Debt doesn't stifle growth as long as there is a way to service the debt. But budget deficits do, as they take money out of the private sector.

[djAdvocate]

not a big believer in stimulus, i take it?

[safeharbor37]

www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm

[floodofsantorum]

Jun 21, 2011 20:22:51 GMT -5 djAdvocate said:

not a big believer in stimulus, i take it?

Huge believer in stimulus when needed. And it is needed now. There is no issue of taking capital away from the private sector as the private sector is awash in capital and unwilling to spend it.

[djAdvocate]

indeed it is. until businesses stop behaving like little girls and start hiring, it will remain needed.

[lakhota]

Productivity/income: Bureau of Labor Statistics, Congressional Budget Office (PDF), Economic Policy Institute, Census Bureau (Excel)

Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.

motherjones.com/politics/2011/06/speedup-americans-working-harder-charts

[formerexpat]

more crack pot junk, another day. Nothing changes with you Lackey.

www.minneapolisfed.org/research/data/specmap/us08-09.cfm

And this is using government inflation statistics, which studies have shown have up to 1pc overstatement per annum.

[lakhota]

I don't trust anything out of Minnesota...

[formerexpat]

I don't trust anything out of Minnesota...

good thing the census bureau supplies the information and Minnie fed doesn't have an agenda like the crack pot sites you use to "support" your views.

[djAdvocate]

Jun 21, 2011 22:40:02 GMT -5 @lakhota said:

I don't trust anything out of Minnesota...

i like The Company Store factory outlet for comforters.

edit: wait, is that Wisconsin?