Leftist: Its a right wing myth that taxes on the wealthy harm economic growth. Reality: Economist Karel Mertens of Cornell University examined how taxes on the wealthy have affected growth in the United States over the 20th century. According to Mertens, “A top marginal rate cut raises real GDP by up to 0.3 percent after two years and also has a positive effect on incomes outside of the top 1%.”[1] Recently published research from Victoria Business School examines how income taxes affected growth in OECD (developed) countries and concluded by stating, “[There is] robust evidence that increases in the marginal rate of personal income tax, as measured by the top rate, and (less robustly) the average labor tax rate, are associated with adverse long-run growth outcomes [in OECD countries].”[2] Also, James D. Gwartney and Robert A. Lawson found that a ten percentage point reduction in a countrys top marginal tax rate will enhance the countries long-term annual economic growth rate by three-tenths of a percentage point. [3] The evidence suggests there are economic costs to confiscatory taxation. Citations: [1] econweb.arts.cornell.edu/km426/papers/MTRI_article.pdf [2] victoria.ac.nz/sacl/about/cpf/publications/pdfs/WP02_2013_TaxRatesinOECD_22032013.pdf [3] mailer.fsu.edu/~jgwartne/garnet-jgwartne/Documents/GwartneyLawsonSocialPhilosophyandPolicy.pdf
Posted on: Fri, 05 Sep 2014 14:00:01 +0000
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