The chart of the day is about tax rates & growth
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March 4, 2013 - 6:00 AM
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March 4, 2013 - 6:00 AM
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Wednesday, May 22, 2013
THE ROANOKE TIMES
Center for American Progress? Methinks the emperor forgot his drawers.
Sorry Dan I seem to be missing the point. What are we supposed to get out of this graph?
Since the graph talks about GDP and tax rates, you may be interested in the video at this site:
http://anticap.wordpress.com/2013/03/03/economist-of-the-day-66/
OK. But as everyone should know, correlation does not imply causality. In other words, there may have been other factors in play that cause the results shown in the chart. Just sayin’…
So the reason we aren’t growing under the Obama administration is because we are allowed to keep too much of our own money.
If we raise the top marginal rates, adjusted for inflation, it will only apply to drug-addicted rock stars who are too stupid to hide their money and lottery winners.
Jack JM,
It’s data, pal. If they said 2+2 = 4 would you question that, too?
Interesting graph, but frankly its useless without units. In addition, why the discrete 35, 38.6, 39.6, and 50 columns? Dan, could you provide a link to the page that this came from?
A different Henry,
In the past 60 years, we’ve had 8 different highest marginal income tax rates. Those are indicated by the numbers on the bottom. The columns themselves indicate what the average gross domestic product growth rate was for the time those marginal rates were in effect.
If the chart shows anything, it’s this: It’s a myth that lower marginal income tax rates = higher growth in the economy. If it did, the lowest rates would be associated with the tallest columns.
Yet, this notion is a truism among conservatives.
Since I have some time at work and felt like digging, I’ve found that the chart above leaves out a TON of historical context.
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates
Note that years where the highest rate was over 80%: 1941-1946. and that amount of income that those applied to (in 2011 dollars): $2.3M+
As you are likely aware, that was World War II. One must wonder then what REALLY contributed to the growth in GDP during that time. Was it high taxes, or military production?
taking more of peoples’ money in the recessionary climate we are in (you libs, please don’t get all atwitter…we’re not in another recession…yet) will not help stave off any further economic decline…it will hasten the continued decline.
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the markets are where they are strictly due to the FED. low interest rates are specifically due to the FED. The job market is were it is strictly due to the FED.
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We borrow over 40 cents for every 100 cents we spend, because libs don’t want a budget.
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Has anyone ever come across a person, company, or organization which WANTS to control spending, but refuses to create a realistic budget, let alone follow a budget? That is what we’ve seen from the libs ever since they’ve been in charge….and ol’ dano NOW comes up with a graph which he says, says “WE DON’T NEED A BUDGET!”
Hey dano, why don’t you run a graph on borrowing vs. spending?
Need an edit button, and serves me right for not paying enough attention:
Since this graph applies to 1950 to present, my previous arguement doesn’t quite fit. That said, would GDP growth have stayed the same if tax rates had stayed at 1950s levels? Impossible to say. As a matter of fact, there doesn’t appear to be much correlation at all. Time to keep digging…
A Different Henry,
You can’t logically infer a causal relationship between high highest-marginal tax rates and high economic growth from the chart. The BEST one can infer is that there is NO causal relationship between low highest-marginal tax rates and economic growth.
In other words, the graph is meaningful only in that it deflates that conservative myth.
Ah, that makes more sense Dan. Perhaps it was the lack of coffee this morning.
While it’s true top marginal tax rates don’t necessarily diminish GDP, there are many other factors that go into this. And the GDP is such a broad measure it’s close to meaningless. For example, our GDP is increasing but it’s being dragged up due to wealth accumulation at the top 1%. If you exclude the top 1% to focus on the 99%, our GDP has declined recently.
If anyone watches the video at the earlier link, you’ll see top income tax avoidance is ruled out and supply side theory is pretty much dismissed. With lowered marginal tax rates, you DO see rent-seeking behavior.
This is gonna be good…
I’m curious to find what DOES have positive (or negative) correlation with GDP growth. I am aware that correlation does not imply causation, but at least that might help in getting us pointed in the right direction.
BTW, I am of the opinion that using data to make pointed political statements does not help in finding a solution. It only serves to get people pointing fingers at each other. Not everyone has thick skin….
A true conserative/capitalist should believe that the government really doesn’t have that much sway over a free-market. Yes, this graph shows there is no relationship between high tax rates vs. economic growth for high earners, which further shows that the government doesn’t have that much sway over the economy.
Frank, is it your contention that Bush presented a budget and that he and Congress stuck to it? Is it really? A budget, however it is manifested is only as good as the people living within it and given the wars and tax reduction (not to mention the Medicare boon), that were not “paid for” nor resulted in lower spending during the Bush years, I am not sure how a sane person can argue that not having a budget voted on is the reason Congress has overspent or the reason we have a deficit. It is a strawman.
Let’s see some of you use that statistical questioning the next time the right wing plops down a graph to show us how bad things are…oh wait, your statistics and charts are always precisely what you say…
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“Figure 4 in the report shows the impact on the primary deficit (revenues less noninterest spending) if the cost containment is sustained throughout the period (Baseline extended) and Figure 5 shows the impact if it is not (Alternative). We provide our information as a share of GDP. We do not calculate it in PV dollars. The Senator’s staff did that. There are number of different reasonable methods one could use that would result in a variety of different estimates. The one released by his office is one such calculation.”
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~Susan J Irving
Director for Federal Budget Analysis, Strategic Issues
U.S. Government Accountability Office
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http://www.gao.gov/special.pubs/longterm/fed/
Hey Dan
Note the column “90+”. I wonder how high over 90 that goes.Because that is pretty close to the 100% complete government confiscation of income.
Wouldn’t that make you and the libs on this blog get a big time tingle going up your leg?
Teresa Martin wouldn’t have to leech off of the Azar’s anymore. Society would be one big exercise in leeching.
frank @ 10:18,
Oh great oracle frank, AKA as question boy, could you please name for me a conservative administration(s) that “WANTED to control spending, but refused to create a realistic budget, let alone follow a budget?”
I have yet to figure out how Dan can continue to insist terps is some kind of smart business man, he does not come off that way, I must say.
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Terps, no one paid 90% of their freaking income in taxes, it was based on tax brackets just like now. Only on the very top of the earnings did they pay a 90% tax rate, not on all of their income. Doubtless they had plenty of loopholes and tax tricks back then too, put the point is that they did not pay 90% taxes on their income.
“Hey Dan
Note the column “90+”. I wonder how high over 90 that goes.Because that is pretty close to the 100% complete government confiscation of income.”
–Terps
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Terps, you know this is untrue. The top marginal rate applies only at top income levels. Thus, the 92 percent rate (1952-53, under a GOP administration, btw) was applied only to anything earned ABOVE $400,000 in 1952 dollars — which is equal to $3.4 million in 2012 dollars. The 92 percent rate applied onto dollars earned above $3.4 million.
What does have a positive (or negative) correlation with GDP is the wages and benefits that workers earn. Our economy is based on “supply and demand”. The rich, represent at best 5% of the population. That is not enough to move the economy.
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When workers have jobs and benefits they feel are secure, they spend money and the economy perks along. When jobs are lost as in well over a decade now, the demand for goods and services slumps right along with them.
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The myth that the right wing has bought into, that taxes are the problem, is just not true. In any business, large or small, profit is what profit is and it is a finite amount. There is a pie and how it is divided matters. If most of the pie is sliced for the owners/managers/investors, the workers can only share in what is left after expenses and that appears to be less and less, despite the lowering of tax rates. When the majority of America gets the least of the share perpetually, that means demand shrinks and it will not return until jobs and job security does. Who sees that coming?
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Bottom line, it is not the share of the pie going to taxes that caused this problem and it will not be the share of the pie going to taxes that will fix it.
“Terps, you know this is untrue. The top marginal rate applies only at top income levels. Thus, the 92 percent rate (1952-53, under a GOP administration, btw) was applied only to anything earned ABOVE $400,000 in 1952 dollars — which is equal to $3.4 million in 2012 dollars. The 92 percent rate applied onto dollars earned above $3.4 million.”
oh OK
So the government is entitled to confiscate all income over 3.4 million? Is that the world that you propose that we live in?
Sandi
I can’t remember anyone saying that I was smart…especially my kids. I was a c student in grade school and my teachers called me an overachiever.
Dan may have called me successful and I consider that high praise.
Good one, Steve!
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I seem to recall that the presidents of at least the last six administrations have managed to accomplish the most basic thing that obuma has so far avoided doing….which is to SIGN A BUDGET passed by both houses of congress. That little thingy is something he’s NEVER done, isn’t it?
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Heck, obuma so badly wants to avoid any oversight on spending that he refused to accept the republicans’ offer for him to be the “decider” on how the sequester cuts get made. obuma said, ahh, “NOPE”! Imagine that.
What I love about terps is that every time you catch him in a distortion, he shrugs it off with, “oh, OK.”
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He knows that income tax rates aren’t a flat tax applied to every dollar earned, and that the flat rate isn’t determined by counting the last dollar earned. Yet that is what he was suggesting.
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Terps: “So the government is entitled to confiscate all income over 3.4 million? Is that the world that you propose that we live in?”
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No, I don’t believe that. I think the rate should be 50 percent oon income over $3.4 million. It’s 40 now, unless you’re a hedge-fund manager, in which case it’s 15, which is a lower rate than the average schoolteacher pays.
Terps is quite smart.
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He got mediocre grades in grade school because he was incorrigible. (That was kinda sorta my problem in college). I’ve heard stories that when Terps was a baby, his folks had to put chicken wire over his crib to keep him from climbing out, or something like that.
Dan, the evidence speaks for itself IMO.
“Yes, this graph shows there is no relationship between high tax rates vs. economic growth for high earners,…”
So why the arguments calling tax increases “economic recovery killers”?
Dan: “No, I don’t believe that. I think the rate should be 50 percent oon income over $3.4 million. It’s 40 now, unless you’re a hedge-fund manager, in which case it’s 15, which is a lower rate than the average schoolteacher pays.”
It is now 23.8% capital gains tax. So if you charge your 50% on income, the hedge fund manager is still only going to pay 23.8%. Instead, the entreprenuer who is creating jobs has to pay 50%.
A.Ryan, thank you for the correction. Those poor hedge fund managers!
ThinkProgress was voted “Best Liberal Blog” – take from its own website.
Dannyboy, you know that old rubric, Figures don’t lie, but liers figure.
Or, in more modern parlance, garbage in; garbage out. Without knowing more about the data collected, used and omitted, the accuracy comes into question.
@22 Terps says, “So the government is entitled to confiscate all income over 3.4 million? Is that the world that you propose that we live in?”
I’m OK with that.
Remember to include the 100% inheritance tax too.
Here’s more information for the RW corporate “champions” factually disputing their constant meme of the “poor” corporations’ tax burden
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“Between 2008 and 2011, 26 major American corporations paid nothing in federal corporate income tax, despite making $205 billion in pretax profits. In 2011 (the last year in which data is available), corporations paid just a 12.1 percent effective tax rate, the lowest in four decades. Many wealthy individuals, meanwhile, are able to drive their tax rates down below the rate paid by middle-class families. Some drive it all the way down to zero.”
http://tinyurl.com/bbhzl4l
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And just which large corporations, you ask, paid NO federal corporate taxes?
For 2011 federal taxes, almost all these 30 companies have maintained their tax dodging ways:
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Pepco Holdings; General Electric; PG&E Corp; Wisconsin Energy; NSource; Paccar; Integrys Energy Group; Atmos Energy; Tenet Healthcare; American Electric Power;
Boeing; Ryder; Conway; Verizon Communications; Duke Energy; Interpublic Group; NexEra Energy, CMS Energy;
Navistar International; Consolidated Edison; Matel; El Paso;
Baxter Intrnational ; Apache; Corning; DTE Energy; Honeywell International; Wells Fargo, and, Dupont.
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Federal income taxes for the [above] 30 companies remained negative, despite $205 billion in pretax U.S. profits. Overall, they enjoyed an average effective federal income tax rate of –3.1 percent over the four years.
http://ctj.org/ctjreports/2012/04/big_no-tax_corps_just_keep_on_dodging.php
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So not only are these companies “slackers”, these giant corporations shrank their U.S. workforce by almost 3 million.
Where are all the RW s who constantly carp about the 47% who they claim pay no taxes [which is a fallacy] and now remain silent on corporations’ lack of paying federal taxes.
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Oh yea, and about those “jobs creators” – another fallacy.
This chart is just more made-up BS by the obama morons….Hey , if they are stupid enough to just `print` money, why wouldn`t they try and fool the fools into believing everything they throw at them ? And low and behold, look who just falls for it….HOOK, LINE, and SINKER !! They`ll stoop to anything to get these morons votes, and it works…Nobody on the left is even willing to investigate….Sheeple ! BBbbaaaaaaaaaa.