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Debunking the claim that higher income-tax rates reduce GDP

17 pointsby darshanabout 15 years ago

6 comments

JeffLabout 15 years ago
I hate how they equate progressive taxation with justice. It only works if you think justice is when people get equal outcomes regardless of if they deserve it or not. It would be unjust to penalize Warren Buffet and the other titans that drive our economy with 91% marginal tax rates. They don't deserve that kind of treatment, and frankly, I trust them to do much better good with their excess cash than the government ever would.
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mseebachabout 15 years ago
One obvious issue with this argument: The claim that higher tax rates can reduce GDP is from Arthur Laffer and his Laffer curve -- and relates to the total tax burden, and not the marginal rate.
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xmstrabout 15 years ago
Nothing like debunking a political debate by writing an op-ed favoring your side of the argument.
barrkelabout 15 years ago
GDP growth in the US in particular can be misleading, owing to population growth. Growth in GDP per capita may be better.
gyardleyabout 15 years ago
Considering the pace of chance in the last forty years, comparing the 1960s and 1970s to today doesn't seem like sound methodology. I suspect, for example, that it's now considerably easier to vote with your feet.
three14about 15 years ago
I read somewhere <i>[citation needed]</i> that the reason that you don't see a real correlation is that the rich effectively tend to pay somewhere around a 40% tax rate. As tax rates go up, it starts to pay to look for tax shelters, and get non-taxable benefits from their company, and so on, and by the time all is said and done, they won't pay more with the higher rate.<p>If true, raising the tax rate won't get any more money for the government, although it might be good PR for the rich and good income for their accountants.