Marginal Income Tax Rates and Economic Growth, Ctd.
Building on yesterday’s post about Mike Kimel’s data crunching of top marginal rates vs. economic growth, today Kimel has created a handy bar chart of t+1 real GDP growth vs. top marginal income tax rate.
Personally, I’d like to see some numbers run on effective tax rates vs. GDP growth (not to mention some inclusion of state and local tax data), but Kimel’s use of the data shows pretty effectively that cutting the top marginal income tax rate does not, in fact, lead to improved economic growth–if there was a cause and effect relationship between low taxes and improved economic growth, there would definitely be a stronger correlation between the two–but there simply isn’t. This is contra the opinions of pretty much all mainstream economists, and defiitely contradicts one of the fundamental talking points of conservative politicians. It also, I might add, goes against what my intuitive expectations would lead me to believe. But the numbers are what they are, and as Robert Heinlein so eloquently put it:
What are the facts? Again and again and again — what are the facts? Shun wishful thinking, ignore divine revelation, forget what “the stars foretell,” avoid opinion, care not what the neighbors think, never mind the unguessable “verdict of history” — what are the facts, and to how many decimal places?
A useful bit of advice for more than just politics, but especially applicable here, I think.