AXIOS today, here:
A bedrock idea of conservative economic philosophy is [the] idea that low taxes fuel economic growth.
This idea is simply false, and history proves it.
We've had 38 years since the Reagan Tax Reform Act of 1986 to prove it correct and it's not.
Real GDP 1986-2024 has grown at a compound annual rate of 2.586%, a rate 29% worse than for the same length of time before that when taxes were much higher.
Real GDP 1948-1986 grew at a compound annual rate of 3.635%.
Tax reform is a complicated topic, the political subject of the AXIOS article.
I can simplify it for you: Tax like we used to in the immediate post-war.
Nominal marginal rates in 1957 (dollars are NOT adjusted for inflation in the tables), the height of the Baby Boom, went from 20% to 91%.
The set up didn't stop people from marrying, having children, and buying houses, and it didn't stop economic growth, because it forced rich people to avoid these confiscatory marginal rates by investing their money domestically to earn income at lower rates of capital taxation.
Ronald Reagan's tax reform was a license to invest elsewhere, and we're all poorer for it.
If Democrats had any brains they would propose richly rewarding domestic investment using the tax code and severely punishing foreign investment. They could start by raising top marginal tax rates on ordinary income and offering much lower long term capital gains tax rates de-linked from ordinary income but only for domestic investment.
The country desperately needs much better economic growth, and the libertarian-Republican consensus is not providing it.
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| Investment abroad eclipsed investment at home for the first time in 1993 and is 200% of domestic today |
