Marginal Tax Rates and GDP Growth

Published on: 18:28PM Jul 22, 2011

 Nobody likes to pay taxes -- unless the alternative is having no income. Nobody wants to pay more taxes rather than less. However, try not to be taken in by simplistic arguments that purport to show less taxes generate more taxes because lower taxes generate more growth. More growth, it is argued, generates more jobs which generate more taxes. Hence less is more.

If you look at the chart below, you will find that the highest marginal rates (the blue line), around 94%, coincided with the highest annual GDP growth in the past 80 years. The second highest growth rate happened when taxes were above 60% in the maximum bracket. And, if you look, you will see that lowering tax rates has had NO DISCERNIBLE EFFECT ON THE ECONOMY.

I see that the Laffer Curve nonsense is being trotted out by the Republican BS artists (mind you, the Dems have plenty of their own -- they are just spewing other nonsense, such as helping Wall Street magically helps Main Street). If the Laffer Curve had any value, any relationship to reality at all, the graph would show some correlation between decreasing taxes and increasing prosperity. It doesn't. The Laffer Curve would better be spelled "Laugher Curve."

My goal here is to keep reality as the focus, not politicians baloney. The graph is real.