'Tax cuts don’t produce growth' by David Leonhardt

If highway repairs are not undertaken within a few years of noticeable decline, the cost of the repair is three to five times higher.

Delayed highway repairs parallel the removing a skin malignancy when it first appears... 

and delaying treatment for a few years.

The time to invest in overdue infrastructure repair is now when interest rates are low, 

rather than later when rates are high and repair costs have exploded geometrically.

America! It's okay to stop stupid now.

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Tax Cuts and Economic Growth

By DAVID LEONHARDT

My Capital Ideas column in this week’s Sunday Review mentions a new report from the Congressional Research Service — a nonpartisan government group that provides analysis to Congress — on the relationship between tax cuts and economic growth.

We have posted the report. The conclusion is below:

The top income tax rates have changed considerably since the end of World War II. Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income distribution are currently at their lowest levels since the end of the second World War.

The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.