Public Assets Institute > Blog > Marginal income tax rates: rhetoric vs. reality

Marginal income tax rates: rhetoric vs. reality

Taxes pay for public education, health care, roads and bridges, communications systems, and other public structures that make it possible for individuals and businesses to thrive in our society.  Making these public investments boosts the economy both in the short term and down the road.

Yet we hear some people saying that high marginal tax rates – the highest income tax rate paid by those at the very top who have a disproportionate share of the money – kill jobs.

Well it turns out that high marginal tax rates don’t kill jobs – at least they haven’t over the past 60 years.  The Center for American Progress provided an analysis of gross domestic product growth since 1950 that finds that growth was higher when the top marginal tax rates were higher, and growth was slower when the top marginal tax rates were lower.

If we’re going to create jobs and boost the economy, history tells us that cutting top marginal tax rates won’t get us there.  A better job-creating idea is to make public investments that benefit us all.

Posted by Paul Cillo on June 28, 2011 at 1:48 pm

One Response to “Marginal income tax rates: rhetoric vs. reality”

  1. Bill Schneider says:

    I guess we’ve all know this just by looking at trends since the 60s — and coving the working years/careers of the about-to-retire first wave of post-WWII babies. Though unexpressed in any analysis I’ve read, the higher rates for top-bracket earners has motivated and given them incentive to be more productive and generate greater cash flow and therefore… tax revenues! This is strictly anecdotal, yet I remember these disgruntled ruminations among such peers and their parents in the 70s especially after Nixon’s depression.