Just for fun…this chart shows top marginal tax rates vs GDP. It’s clear that GDP grew quite nicely when top tax rates were at 70-90%. Can one of the anti-taxers please present data, any data at all, that shows how lower taxes lead to a stronger economy and better society? If you look at our own history, you’ll see that the periods with the lowest top tax rates caused/coincided with the greatest concentrations of wealth/income, and led to devastating depressions and economic shocks.
But is the theory true? Do tax cuts really spur growth?
The answer appears to be “no.”
According to a new study by the Congressional Research Service (non-partisan), there’s no evidence that tax cuts spur growth.
In fact, although correlation is not causation, when you compare economic growth in periods with declining tax rates versus periods with high tax rates, there seems to be evidence that tax cuts might hurt growth. But we’ll leave that possibility for another day.
One thing that tax cuts do unequivocally do–at least tax cuts for the highest earners–is increase economic inequality. Given that economic inequality is one of the biggest problems we face in this country right now, this conclusion is very important.
