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.

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

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