Soaking the rich won’t grow the economy

posted by
December 20, 2011
Cato Institute
by Alan Reynolds  
Posted in Commentary

"We tried soaking the rich in the past, but the resulting revenue loss was more than we possibly could afford today. Individual income tax rates of 20-91 percent under Eisenhower brought in only 7.7 percent of GDP. Lower tax rates of 14-70 percent from 1964 to 1981, thanks to President Kennedy, brought in 8 percent of GDP. A top tax of 28 percent from 1988 to 1990 brought in 8.1 percent of GDP. By contrast, raising the capital gains tax to 28 percent from 1987 to 1996 thwarted stock sales and clearly cost the Treasury a bundle. What was fairer about high tax rates that were not paid?" (12/16/11)

http://www.cato.org/pub_display.php?pub_id=13939  

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