From: John Conover <john@email.johncon.com>
Subject: Deming said, "in God we trust, all others bring data"
Date: Wed, 14 Aug 1996 02:29:44 -0700
I was watching the the "Republican Show" today, and one of the
prevailing concepts is that a lower capital gains tax would increase
GDP. I wondered if that can be substantiated.
http://www.doc.gov/resources/ESA_info.html Economics and
Statistics Administration, US Department of Commerce, DOC
or:
gopher://sunny.stat-usa.gov:70/11/BudgetFY96
the answer is, well, no.
To summarize, (the data is available, to one and all, as graphs, or as
raw text/tabular data-take your pick,) economic growth during the
1960s was superb, yet tax rates for wealthy individuals,
corporations-and capital gains-were high (by today's standards.) The
top marginal tax rate from 1950 to 1963 was 91.1 percent. For the
rest of the 1960s, the top rate was over 70 percent. And, from 1914 to
1994, 80 percent of the time, higher top bracket marginal tax rates
are associated with higher economic growth rates. (The grid marks can
be counted by hand, or, you can run a correlation analysis, perhaps by
Mathematica, etc., on the tabular data-take your pick.) Corporate
taxation from 1962 through 1969 provided about 45 to 42 percent of
government income tax revenues, and real GDP growth during that period
was excellent:
1962: 5.5 percent
1963: 3.5
1964: 5.4
1965: 5.0
1966: 6.4
1967: 4.3
1968: 3.0
1969: 4.0
The percentage of income tax revenue from corporations has today
dropped to about 25 percent. (The "slack" was made up by payroll
taxes, and the current GDP is around 2 percent.)
Other than that, the "prevailing concept" is based on sound scientific
evidence ...
John
--
John Conover, john@email.johncon.com, http://www.johncon.com/