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Recently Curtis S. Dubay, a senior policy analyst at the Heritage Foundation specializing in tax issues,
claimed ͙͞higher taxes always mean slower economic growth͙͟ While this claim is often repeated the
facts over the past 50 years indicate it is wrong, at least when applied to the taxes of the wealthiest
Americans.

During the 1960͛s the highest federal income tax rate, applicable to only the wealthiest of Americans,
averaged 79.1%. In spite of this onerous rate real GDP per capita grew an average of 3.33% per year. In
the ͚70͛s the maximum tax rate was lowered to an average of 70% yet real GDP per capita only grew an
annual average of 2.53%.

Since the economic growth of the ͚70͛s was less than the politicians would have liked, they decided to
lower taxes once again in the ͚80͛s. The top federal tax rate was slashed to 45.9%. However, during this
same period, real GDP per capita only averaged a gain of 2.47% per year. During the 1990͛s the
maximum tax rate was lowered to an average of 37.7%. And the economic growth that had been
promised time and time again? Real GDP per capita only managed to grow a paltry 2.06% annually.

From 2001 to 2009 the average federal income tax rate paid by the wealthiest Americans fell to
35.8%. Did this lower rate finally bring us greater economic growth? Once again, the answer is no.
During the first decade of the 21st century growth of real GDP per capita dropped to an annual average
of 0.61%. That͛s less than a fifth of the rate of real economic growth experienced in the ͚60͛s when the
maximum federal income tax rate was over twice as high.

Senator Moynihan believed ͙͞you are entitled to your own opinion, but not to your own facts.͟ And
a senior analyst specializing in tax issues should have a better knowledge of the facts involving income
taxes and economic growth. There is simply no credible evidence to support the claim that lowering
taxes on the wealthiest Americans will lead to greater economic growth. In fact, over the last fifty years,
history has shown when the highest tax rates are lower, the economy is slower.

Copyright 2010 ʹ J. Peter Van Schaik