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Top Individual Income Tax Rates and the GDP Growth: Exposing the Lies of Rush Limbaugh and Right-Wing Republicans

I am sick and tired of propagandist Rush Limbaugh claim, almost on a daily basis, that lower taxes, and he means the rate on the top individual income tax bracket, or marginal tax rate, leads to higher growth. Most right-wing Republicans believe in his lies and never bother to check the facts with the benefit of the hindsight. There is no subject related to the economy in America that has more propaganda than taxes because over time trillions are at stake.

I have known that Limbaugh and other Right-wingers have been lying and finally decided to present the facts in graphical form, as shown in Fig. 1. As you can see, as the top rate has fallen from 90% to 35%, the annual GDP growth rate for the following 8 years has fallen from 5% to 1.5%.

Since the GW Bush tax cuts, all the GDP growth, and lot more, has been bought by $12.5Tr in additional federal govt and household debt. But for the growth due to borrow-and-spend the annual GDP growth in the US since 2001 would have been close to -4% (minus four percent). Can you spell g-r-e-a-t-e-r d-e-p-r-e-s-s-i-o-n? The cost of postponing the greater depression is simply a much worse and longer lasting depression in the future. The time bomb is ticking.

Tax Rates and Growth 1950-2012

 

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