[quote=AN]
Also, keep in mind that business owners can be in other brackets than just the top most bracket. So, if it is true that higher marginal rate stimulate business growth, then wouldn’t it make sense to increase rates for the lower tax brackets as well?[/quote]
No, and here’s why. The proposed changes (and the changes I’ve been discussing) are related to taxpayers with income over $250K a year. As we’ve discussed, this is a pretty decent income, and it allows for a nice, if not extravagant lifestyle. The further under that income level, the more likely most, if not all income will be spent and not saved.
Business growth is not free. It often requires new investment. New marketing, new employees, new equipment. When there is excess cash flow, over and above basic needs, the higher the tax rates, the higher the effective subsidy for that new investment. When that evaluation includes giving up basic needs (smaller house, no new car) the calculation is more complex.
As far as evidence for some of the things I’ve said, see the link below. The guys who write there are both academics and working economists. Some of it is pretty wonky, but they do some serious data crunching, with regression analyses (something I haven’t done for decades), that support their conclusions. Most of all, I like their stuff because they almost always show their work, and readily accept criticism.
