Friday, September 28, 2012

Tax Cuts and GDP Growth

No Correlation

 ~ As is true for virtually every trickle-down economic theory, the facts puncture the ideological balloon. Tax cuts haven't resulted in GDP growth:

No correlation between tax cuts and GDP growth

Have ... declining tax cuts for the rich--the "job creators" who are being given a bigger incentive to invest by the reduced tax rates--led to faster economic growth?


... The slope of the solid line in each chart is the key.

The lefthand chart shows that there is no correlation between GDP growth and the top marginal tax rates. The righthand chart shows that there might be a very modest tendency toward faster economic growth with higher capital gains rates. (But those who love today's record-low capital gains rates will be relieved to know that the [non-partisan Congressional Research Service] does not find this correlation to be statistically significant.)
These tax cuts, however, are strongly correlated with surging deficits, mounting debt, and burgeoning economic inequality.

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