Job Killing Taxes

[Star]

The chart below puts the lie to the Republican mantra that high marginal tax rates on the wealthiest among us kill economic growth. In fact-----in fact the empirical evidence shows; just the opposite is true, high marginal tax rates on the wealthiest among us equals economic growth.




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.

 

[JoeNormal]

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.

Absolutely true but the cons at the top of the heap have a lot to lose by admitting this. So they won't.

 

[itfitzme]

It all depends on whether there is an opportunity for growth.

 

[EdwardBaiamonte]

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.

Absolutely true but the cons at the top of the heap have a lot to lose by admitting this. So they won't.

how could taking hard earned money from job creators and giving it liberal bureaucrats to spend make the economy grow.


liberal bureaucrats are not inventors engineers and entrepreneurs!!!

 

[Star]

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.

Absolutely true but the cons at the top of the heap have a lot to lose by admitting this. So they won't.

how could taking hard earned money from job creators and giving it liberal bureaucrats to spend make the economy grow.


liberal bureaucrats are not inventors engineers and entrepreneurs!!!

If the chart makes the Republican cut taxes mantra look idiotic -- so be it. I can see why you and other Republicans are afraid to address the chart that puts the lie to the Republican mantra that lower taxes on the wealthiest among us are good for the economy but...
...but using Romneyspeak -- au contraire, mon ami -- it's up to you to show how-when-where giving tax comfort to the comfortable created jobs or-----or grew the economy.


Somehow you missed the point of the chart, I'll spell it out for you. The chart could not be more clear --- higher taxes on the wealthiest among us equals high GDP growth, lower taxes on the wealthiest among us equals low GDP growth-----g'head blow your smoke, it's all ya got.

 

[TakeAStepBack]

Correlation does not imply causation. You're trying to equate the monetary health and policy over a span where it changed drastically. You're also omitting other variables that would better indicate the reasons why growth can occur under those conditions.

Furthermore, raising the tax rates on the under the current weight of hiring tax burdens, massive debt, etc...isn't going to get you the desired result. The exact opposite. But I say lets do it. Lets tax the 200K plus crowd at 90% and see what happens. If tax revenue goes down and more jobs leave the country, you LOLberals morons have to agree to leave the country for good.

 

[expat_panama]

Correlation does not imply causation. ...

Sure it does, but Star failed to show either.

We're trying to see what taxes do to real GDP. Fine all we do is plot tax rates with real GDP--

--and anyone can see that high taxes mean low GDP and low taxes make for high GDP.

 

[CrusaderFrank]

Obama can fund more Solyandras with tax payer money

 

[TakeAStepBack]

That doesn't really capture it either. Because GDP grew while top inc. rates were extreme in the 1950s, rather than declined. That is because correlation does not imply causation. There are other variables that need to be considered to make this determination properly.

Common sense says that the lower taxes spur GDP growth. But in this case, GDP grew steadily throughout and began to sag at the end of the graph curve while taxes were lower.

 

[JoeNormal]

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.

Absolutely true but the cons at the top of the heap have a lot to lose by admitting this. So they won't.

how could taking hard earned money from job creators and giving it liberal bureaucrats to spend make the economy grow.


liberal bureaucrats are not inventors engineers and entrepreneurs!!!

Whatever the mechanism, money needs to be put into the hands of the people who will spend it. When you give the rich more money than they know what to do with, they'll just sit on it.

 

[itfitzme]

Correlation does not imply causation. ...

Sure it does, but Star failed to show either.

We're trying to see what taxes do to real GDP. Fine all we do is plot tax rates with real GDP--

--and anyone can see that high taxes mean low GDP and low taxes make for high GDP.

Sorry, population and efficiency also increased. So all you have is coincidence, not causality.

 

[itfitzme]

That doesn't really capture it either. Because GDP grew while top inc. rates were extreme in the 1950s, rather than declined. That is because correlation does not imply causation. There are other variables that need to be considered to make this determination properly.

Common sense says that the lower taxes spur GDP growth. But in this case, GDP grew steadily throughout and began to sag at the end of the graph curve while taxes were lower.

Yeah, common sense was that if you hold a witches head underwater, she wouldn't drown.

Turns out, they all drowned and there were no witches.

 

[Star]

Absolutely true but the cons at the top of the heap have a lot to lose by admitting this. So they won't.

how could taking hard earned money from job creators and giving it liberal bureaucrats to spend make the economy grow.


liberal bureaucrats are not inventors engineers and entrepreneurs!!!

Whatever the mechanism, money needs to be put into the hands of the people who will spend it. When you give the rich more money than they know what to do with, they'll just sit on it.

Bush 41 saw supply side (Reagannomics) economics for what it is, so he coined the term "voodoo economics" on April 14, 1980.


Paul Ryan's budget is Reaganomics on steroids and just as wrong, probably worse, for the American economy-----obviously, obviously higher taxes on the wealthiest among us don't stifle growth. The thing the righties are unable to dispute is the empirical documentation in the OP chart-----when taxes are higher on the wealthiest among us the American economy thrives, Republicans can whine all they want to but, but whining is all the Republicans have -- Republicans are unable to show how-when-where the chart in the OP is wrong.





In his budget reboot speech yesterday, Paul Ryan asserted that allowing the Bush tax cuts to expire would lead to economic calamity:

we cannot get our economy back on track if Washington tries to tax its way out of this mess.
​

The economics profession has been really clear about this – higher marginal tax rates create a drag on economic growth.
​

As the University of Chicago’s John Cochrane recently wrote: “No country ever solved a debt problem by raising tax rates. Countries that solved debt problems grew, so that reasonable tax rates times much higher income produced lots of tax revenue. Countries that did not grow inflated or defaulted.”
​

Since the proposal in question involves restoring Clinton-era top tax rates, let's look and see how that worked out:

It seems pretty clear that whatever work-disincentive effect marginal tax rates may have, we're well below the point where it can be detected.

 

[expat_panama]

--and anyone can see that high taxes mean low GDP and low taxes make for high GDP.

...correlation does not imply causation. There are other variables...

...coincidence, not causality.

How come nobody can see the sarcasm --oh, wait a sec.,

--now it's fixed. Everyone should be able to see the sarcasm now.

Seriously, by now everyone has to agree that Star's bar chart and my above graph show opposite correlations and neither shows causality. However, if Star really thinks that everyone's better off if his money goes to the government, then he's free to give everything to the US Treasury through this website.

 

[Wiseacre]

There were many reasons why the US economy thrived in the 50s, but that high tax rate wasn't one of them. It was a different time, different culture, different circumstances. To compare that time to this is apples and oranges IMHO. Why stop there, if you go back to the 1920s, you will see that the US economy took off when the tax rates were sharply reduced. What's your answer to that?

Then there are the examples of numerous countries who managed to achieve fiscal respinsibility mainly by cutting spending over the past 20 years or so. Some taxes did go up in most cases, but the ratio was heavily to the spending side. Start with Canada in the mid 90s, they got out of the hole they were in by curtailing their spending, not by raising taxes.

 

[eflatminor]

...high marginal tax rates on the wealthiest among us kill economic growth.

What makes you think anyone believes taxes are the only influencing factor on economic growth? We can have periods of high rates with poor economic growth and periods with excellent growth. There are MANY factors affecting economic growth.

That said, logic and reason dictate that taking money from the most productive citizens and business owners will not help the economy. That would only be the case if taxes were stimulative and that's never the case...despite what Nancy Pelosi might tell you.

Saying taxes help the economy is akin to someone robbing the local grocery store of the till, taking some of that money and giving it to a bum on the street. Then, when he goes into that store to buy beer, calling that stimulative. Central planners (including Robin Hood) cannot stimulate economic growth, they can only redistribute wealth.

Read about the fallacy of the broken window, if you care to understand the flaw in your thinking.

 

[EdwardBaiamonte]

Central planners (including Robin Hood) cannot stimulate economic growth, they can only redistribute wealth.

very true indeed. We got from the stone age to here because private folks invented and marketed new stuff, not because government did that!!!

 

[Rshermr]

Central planners (including Robin Hood) cannot stimulate economic growth, they can only redistribute wealth.

very true indeed. We got from the stone age to here because private folks invented and marketed new stuff, not because government did that!!!

Ed, you are true to form. Those who run the tea party groups want what is good for the wealthy. Corporations like low taxes, because they get more of the wealth. Simple.

But that has nothing to do with economic stimulation. I have asked MANY times, and not gotten, a time when federal income taxes were reduced and the economy improved. I have yet to see anyone provide such proof.

So, why do decreased highest tax rates cause a decline? Easy. If you decrease taxes, you must decrease spending. Decreased spending means federal job cuts.
Federal job cuts means less spending on goods and services.
Federal job cuts decreases income taxes coming into the fed, INCREASING the deficit.
Less spending on goods and services means other jobs go away, due to lack of revenue coming to those companies.
Increased deficit and increased unemployment spurs those who did the last tax cut to DO IT AGAIN.
Go back to the start of the list of causalities. You are now in the great downward spiral.

BUT, the RICH GET RICHER!!!!!

 

[EdwardBaiamonte]

Corporations like low taxes, because they get more of the wealth. Simple.

perfect liberal illiteracy. Lower costs from reduced taxes or reduced raw materials must be passed on to consumers or competitors will. The goof liberal lacks the IQ to know what capitalism is?

 

[EdwardBaiamonte]

. I have asked MANY times, and not gotten, a time when federal income taxes were reduced and the economy improved.

illiterate liberal strikes again. Ireland dropped taxes and the whole world flooded there to build businesses.

Canada drops taxes on motion picture production and tons of new movies get made there.

Liberals put luxury tax on Yachts and the industry dries up, until tax is repealed .


USA has lowest taxes and is wealthiest country in human history