Tag Archives: tax

Informative Graphics on Taxes and the Economy

The nonpartisan Congressional Research Service0 made news1 when a report the service had prepared was withdrawn due to pressure from Republican leaders.

The report - titled Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 19452,3 - addressed some of the evidence for the association between tax rates and economic growth, private savings, and investment. No statistically significant associations were found between tax rate (either the top marginal tax rate or the capital gains tax rate) and the degree of personal savings, personal investment, labor productivity, or per capita GDP growth. Hence, the report authors conclude that there is insufficient evidence to suggest that changes in tax rates affect these economic indicators.

But, while these authors did not find statistical significance, I found the associated graphics tell an interesting story:

Tax Rate vs. Personal Savings and Investment

Tax Rate vs. Per Capita GDP Growth