Raising Taxes on the Rich Would In Fact Fuel Job Growth

We’ve all heard the Republican argument that if we continue to keep personal income taxes low for Scrooge McDuck, he will take this personal money he would otherwise pay in taxes and which he could spend on any number of things – a newer car, travel, really, really expensive and delicious june bugs – and invest it in enterprises that produce jobs.

Republicans tells us, as did former Gov. Mitt Romney, “With over 20 million people who are unemployed or who have stopped looking for work, the last thing we should be doing is raising taxes on job-creators, entrepreneurs, and small business owners across America.”

Except they’re dead wrong. Michael Linden, at the Center for American Progress, crunched the numbers.

In the past 60 years, job growth has actually been greater in years when the top income tax rate was much higher than it is now.

For instance, in years when the top marginal rate was more than 90 percent, the average annual growth in total payroll employment was 2 percent. In years when the top marginal rate was 35 percent or less—which it is now—employment grew by an average of just 0.4 percent.

And there’s no cherry-picking here. Pick any threshold. When the marginal tax rate was 50 percent or above, annual employment growth averaged 2.3 percent, and when the rate was under 50, growth was half that.

In fact, if you ranked each year since 1950 by overall job growth, the top five years would all boast marginal tax rates at 70 percent or higher. The top 10 years would share marginal tax rates at 50 percent or higher. The two worst years, on the other hand, were 2008 and 2009, when the top marginal tax rate was 35 percent. In the 13 years that the top marginal tax rate has been at its current level or lower, only one year even cracks the top 20 in overall job creation.

Leave a Reply

Your email address will not be published. Required fields are marked *