The proposition that low tax rates produce higher economic growth has
been a central plank of the Republican platform since I was a teenager. ... But while the message has not changed, the track record of the last
three decades does not bear out the core proposition of Republican
economic doctrine. ...
Thomas L. Hungerford, an economist with the Congressional Research Service, got into trouble with Republicans last year when he published a study
suggesting that the sharp drop in top tax rates since 1945 did little
to lift economic growth but probably did contribute to soaring income inequality.
And there’s no clear evidence that lower tax burdens have helped the
United States grow faster than other advanced industrial nations with higher tax rates and much heavier tax burdens.
Economic growth per person in the United States was a little faster
than in France or Australia over the last 40 years. But it was a little
slower than in Austria, Germany and the Netherlands, according to data
from the Organization for Economic Cooperation and Development, a
research organization for the world’s richest countries.
While high taxes do have an effect on variables that affect growth, many
other factors are much more significant and overshadow whatever taxes
Recent history may even suggest the economy thrives when taxes are
higher. Despite President Bush’s tax cuts, the economy during his
administration grew only about 17 percent, half as much as during that
of his predecessor, Bill Clinton, who had raised them. ...
As in the early 1980s, the economy today remains well below its
capacity. And Republicans are again calling for lower tax rates as a
tonic for faster growth. But if lower taxes do not deliver higher
growth, why should the nation pursue them?
“It’s hard to say for sure what our economic trajectory would have
looked like with higher taxes,” said Alan Auerbach, an expert on the
economics of taxation at the University of California, Berkeley. “Some
of the disappointment that our low taxes haven’t had a more obvious
impact comes from overblown claims of tax cut supporters.”