From: John Conover <firstname.lastname@example.org>
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, email@example.com, http://www.johncon.com/