Income Taxes & Economic Growth
Politicians argue that reducing income taxes stimulates economic growth. Here are the facts.
In the 31 years from 1950 to 1980, the top income tax rate ranged from 70% to 91%. Economic growth during this period was averaged 3.9%.
During the Reagan-Bush presidencies, the top income tax rate was first reduced to 38.5% then to 31%. Economic growth declined to 3.1%.
During the Clinton years, the top income tax rate was increased to 39.6% and economic growth rate rose to 3.9%.
The top income tax rate dropped to 35% the George W Bush presidency and economic growth dropped to 2.1%.
Conclusion: The evidence shows that cutting income taxes, particularly for people with high income, does not produce economic growth. Factors other than taxes are more important to economic growth.
