AEIdeas

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Discussion: (3 comments)

  1. Tom Sullivan

    The size of government is not just taxing, but total spending which includes borrowing – which eats up what could otherwise be investment capital. It is also the double-barreled effect of regulation – direct costs of regulatory compliance, and secondary costs which include opportunity costs. Total government cost (federal, state, local; spending and regulations) was less than 10% in 1900, about 30% in 1950, and is now around 60% of GDP. The costs of regulation compliance are about 20% of GDP. The costs of government are now absurdly, pathologically high.

  2. Sharmarke

    “The lesson here: Lower marginal tax rates and less government interference are pretty important for economic growth.”

    This is the wrong thing to assume. Between 1947 and 1979, GDP growth surged at an average annual rate of 3.8%, compared to a paltry 2.3% since 1980 (as of 2011’s end).

    Productivity growth has averaged 3.7% between 1947 and 1979, compared to only about 2.5% since.

    Median incomes, adjusted for inflation, climbed between 2-5 times the rate that median incomes, inflation-adjusted, have grown since 1979, between 1947 and 1979.

    Marginal tax rates have hovered above 70% between 1947 and 1979, and federal regulations were twice as expansive as they are today.
    http://www.huppi.com/kangaroo/L-fortyyears.htm

    Effective tax rates were above 50% for the very richest of Americans between 1950-1981, but have since fallen to under 22%, and tax breaks and loopholes have proliferated:
    http://www.americanprogress.org/issues/2011/06/low_tax.html

    Your post is yet another piece of misinformation that serves the interests of concentrated economic power at the expense of the overall economy.

    1. Sharmarke

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