Politics

High tax rates and economic growth

From Paul Krugman is this interesting chart about the upper tax rate. I don’t think (and I doubt anyone else does) that high taxes/high regulation cause growth but it is clear that low taxes/low regulation are not the be-all/end-all of economic policies.

The blue line, left scale, shows median family income in 2008 dollars; the red line, right scale, shows the top marginal tax rate, a rough indicator of the overall stance of policy. Basically, US postwar economic history falls into two parts: an era of high taxes on the rich and extensive regulation, during which living standards experienced extraordinary growth; and an era of low taxes on the rich and deregulation, during which living standards for most Americans rose fitfully at best.

taxes-growth.png
The Krugman post was inspired by Richard Green who got the data from US Dept of Commerce’s Bureau of Economic Analysis
And I still like the earlier comic I posted from The Politics in Deficits & Taxes
grab-004.png

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