Posted on 06/21/2013 9:50:25 PM PDT by ridin dirty
The following is from the Tax Foundation and represents the bulk of peer reviewed economics research on the deleterious effect of high taxes or increased taxes on economic growth.
The anti-science voodoo liberal/progressive/Marxist/socialist crowd hate it when you drop empirical research in their laps.
2 Karel Mertens & Morten Ravn, The dynamic effects of personal and corporate income tax changes in the United States, American Economic Review (forthcoming) (2012). U.S. Post-WWII exogenous changes in personal and corporate income taxes Negative A 1 percentage point cut in the average personal income tax rate raises real GDP per capita by 1.4 percent in the first quarter and by up to 1.8 percent after three quarters. A 1 percentage point cut in the average corporate income tax rate raises real GDP per capita by 0.4 percent in the first quarter and by 0.6 percent after one year.
3 Norman Gemmell, Richard Kneller, & Ismael Sanz, The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries, 121 Economic Journal F33-F58 (2011). 17 OECD countries (Early 1970s to 2004) Negative Taxes on income and profit are most damaging to economic growth over the long run, followed by deficits, and then consumption taxes.
4 Jens Arnold, Bert Brys, Christopher Heady, Åsa Johansson, Cyrille Schwellnus, & Laura Vartia, Tax Policy For Economic Recovery and Growth, 121 Economic Journal F59-F80 (2011). 21 OECD countries (1971 to 2004) Negative Corporate taxes most harmful, followed by taxes on personal income, consumption, and property. Progressivity of PIT harms growth. A 1 percent shift of tax revenues from income taxes (both personal and corporate) to consumption and property taxes would increase GDP per capita by between 0.25 percent and 1 percent in the long run. Corporate taxes, both in terms of the statutory rate and depreciation allowances, reduce investment and productivity growth. Raising the top marginal rate on personal income reduces productivity growth.
5 Robert Barro & C.J. Redlick, Macroeconomic Effects of Government Purchases and Taxes, 126 Quarterly Journal of Economics 51-102 (2011). U.S (1912 to 2006) Negative Cut in the average marginal tax rate of one percentage point raises next year’s per capita GDP by around 0.5%.
6 Christina Romer & David Romer, The macroeconomic effects of tax changes: estimates based on a new measure of fiscal shocks, 100 American Economic Review 763-801 (2010). U.S. Post-WWII (104 tax changes, 65 exogenous) Negative Tax (federal revenue) increase of 1% of GDP leads to a fall in output of 3% after about 2 years, mostly through negative effects on investment.
7 Alberto Alesina & Silvia Ardagna, Large changes in fiscal policy: taxes versus spending, in Tax Policy and the Economy, Vol. 24 (Univ. of Chicago Press, 2010). OECD countries (fiscal stimuli and fiscal adjustments, 1970 to 2007) Negative Fiscal stimuli based upon tax cuts more likely to increase growth than those based upon spending increases. Fiscal consolidations based upon spending cuts and no tax increases are more likely to succeed at reducing deficits and debt and less likely to create recessions.
8 International Monetary Fund, Will it hurt? Macroeconomic effects of fiscal consolidation, in World Economic Outlook: Recovery, Risk, and Rebalancing (2010). 15 advanced countries (170 fiscal consolidations over the last 30 years) Negative 1% tax increase reduces GDP by 1.3% after two years.
9 Robert Reed, The robust relationship between taxes and U.S. state income growth, 61 National Tax Journal 57-80 (2008). U.S. states (1970-1999, 5 year panels) Negative Robust negative effect of state and local tax burden. Multi-year panels mitigate misspecified lag effects, serial correlation, and measurement error.
10 N. Bania, J. A. Gray, & J. A. Stone, Growth, taxes, and government expenditures: growth hills for U.S. states, 60 National Tax Journal 193-204 (2007). U.S. states Negative Taxes directed towards public investments first add then subtract from GDP.
11 Young Lee & Roger Gordon, Tax Structure and Economic Growth, 89 Journal of Public Economics 1027-1043 (2005). 70 countries (1980 - 1997, cross-sectional and 5 year panels) Negative Reducing corporate income tax 1 percentage point raises annual growth by 0.1 to 0.2 points.
12 Randall Holcombe & Donald Lacombe, The effect of state income taxation on per capita income growth, 32 Public Finance Review 292-312 (2004). Counties separated by state borders (1960 to 1990) Negative States that raised income taxes averaged a 3.4% reduction in per capita income.
13 Marc Tomljanovich, The role of state fiscal policy in state economic growth, 22 Contemporary Economic Policy 318-330 (2004). U.S. states (1972 to 1998, multi-year panels) Negative Higher tax rates negatively affect short run growth, but not long run growth.
14 Olivier Blanchard & Robert Perotti, An Empirical Characterization Of The Dynamic Effects Of Changes In Government Spending And Taxes On Output, 107 Quarterly Journal of Economics 1329-1368 (2002). U.S. Post-WWII (VAR/event study) Negative Positive tax shocks, or unexpected increases in total revenue, negatively affect private investment and GDP.
15 F. Padovano & E. Galli, E., Tax rates and economic growth in the OECD countries (1950-1990), 39 Economic Inquiry 44-57 (2001). 23 OECD countries (1951 to 1990) Negative Effective marginal income tax rates negatively correlated with GDP growth. 16 Stefan Folster & Magnus Henrekson, Growth effects of government expenditure and taxation in rich countries, 45 European Economic Review 1501-1520 (2001). Rich countries (1970 to 1995) Negative Tax revenue as a share of GDP negatively correlated with GDP growth.
17 M. Bleaney, N. Gemmell & R. Kneller, Testing the endogenous growth model: public expenditure, taxation, and growth over the long run, 34 Canadian Journal of Economics 36-57 (2001). OECD countries (1970 to 1995) Negative Distortionary taxes reduce GDP growth. Consumption taxes are not distortionary.
18 R. Kneller, M. Bleaney & N. Gemmell, Fiscal Policy and Growth: Evidence from OECD Countries, 74 Journal of Public Economics 171-190 (1999). OECD countries (1970 to 1995) Negative Distortionary taxes reduce GDP growth.
19 Howard Chernick, Tax progressivity and state economic performance, 11 Economic Development Quarterly 249-267 (1997). U.S. states (1977 to 1993) Negative Progressivity of income taxes negatively affects GDP growth.
20 Enrique Mendoza, G. Milesi-Ferretti, & P. Asea, On the Effectiveness of Tax Policy in Altering Long-Run Growth: Harberger’s Superneutrality Conjecture, 66 Journal of Public Economics 99-126 (1997). 18 OECD countries (1965-1991, 5 year panels) None Estimated effective tax rates on labor and capital harm investment, but effect on growth is insignificant. Effective consumption taxes increase investment, but not growth. Overall tax burden levels have no effect on investment or growth.
21 Stephen Miller & Frank Russek, Fiscal structures and economic growth: international evidence, 35 Economic Inquiry 603-613 (1997). Developed and developing countries Negative Tax-financed spending reduces growth in developed countries, increases growth in developing countries.
22 John Mullen & Martin Williams, Marginal tax rates and state economic growth, 24 Regional Science and Urban Economics 687-705 (1994). U.S. states (1969 to 1986) Negative Higher marginal tax rates reduce GDP growth.
23 William Easterly & S. Rebelo, Fiscal Policy and Economic Growth: An Empirical Investigation, 32 Journal of Monetary Economics 417-458 (1993). Developed and developing countries None Effects of taxation difficult to isolate empirically.
24 Reinhard Koester & Roger Kormendi, Taxation, Aggregate Activity and Economic Growth: Cross-Country Evidence on Some Supply-Side Hypotheses, 27 Economic Inquiry 367-86 (1989). 63 countries Negative Controlling for average tax rates, increases in marginal tax rates reduce economic activity. Progressivity reduces growth.
25 Jay Helms, The effect of state and local taxes on economic growth: a time series-cross section approach, 67 Review of Economics and Statistics 574-582 (1985). U.S. states (1965 to 1979) Negative Revenue used to fund transfer payments retards growth.
26 Claudio J. Katz, Vincent A. Mahler & Michael G. Franz, The impact of taxes on growth and distribution in developed capitalist countries: a cross-national study, 77 American Political Science Review 871-886 (1983). 22 developed countries None Taxes reduce saving but not growth or investment.
Note that 3 out of 26 studies found no correlation between higher taxes and lower growth, while 23 out of 26 studies found a definite correlation and causation between higher taxes and lower growth (including one by Obama’s former economic adviser and possible Fed Chairman nominee, Romer).
Equally important, ZERO studies found a correlation between higher taxes and higher growth.
Amusingly, when confronted with this PEER REVIEWED research, progressives/Marxists/socialists/liberals resort to citing a ‘study’ from the CRS (Hungerford) that was so flawed that it was immediately discredited. Moreover, this oft cited crap still did not find a correlation between higher taxes and higher growth.
The bottom line is that when those on the Left sing the praises of higher taxes, higher growth and the increased living standards that come with higher growth — present the bulk of peer reviewed research on the issue to silence the automatons.
Facts no longer matter. We are in free fall now.
Yes, you can view the entire report at their respective economics journal. Note that I have included the exact issue with authors, titles, dates, etc.
Moreover, most of the research reports are available for free online. I will post one report every couple days starting in no particular order with this one:
“We examine the impact of the Canadian provincial governments’ tax rates on economic growth using panel data covering the period 1977–2006. We find that a higher provincial statutory corporate income tax rate is associated with lower private investment and slower economic growth. Our empirical estimates suggest that a 1 percentage point cut in the corporate tax rate is related to a 0.1–0.2 percentage point increase in the annual growth rate”—Ergete Ferede and Bev Dahlby, National Tax Journal, September 2012, 65 (3), 563–594
More peer reviewed science confirming the dangerous effects of increased taxation on economic growth and living standards:
“we find in our benchmark specification that a one percentage point cut in the APITR raises real GDP per capita on impact by 1.4 percent and by up to 1.8 percent after three quarters. A one percentage point cut in the ACITR raises real GDP per capita on impact by 0.4 percent and by up to 0.6 percent after one year.”—Karel Mertens and Morten O. Ravn, 2012
In sum, anti-science progressive drones hate peer reviewed empirical research as it routinely debunks their faith-based notions regarding taxes and govt. spending.
More coming.
Source: http://www.bde.es/investigador/papers/sie1206.pdf
More science to debunk the faith-based utopian progressives/Marxists/socialists dogma regarding taxes and growth:
“Overall, we find an overwhelmingly strong negative relation between tax and growth”—Patrick Minford and Jiang Wang
The bottom line is that increased taxes seriously stunt economic growth and with it living standards. Hence, allowing progressives to control the levers of power in Washington or anywhere else will destroy American prosperity and, in turn, dangerously undermine freedom, stability and security.
Source: http://www.patrickminford.net/Academic_Page/growthandtaxpaper10.pdf
More science to follow.
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