@80. venividivici:
Again, the analogy doesn’t hold, as there was the one-off effect of the commercialization of the Internet driving growth.
So much for analogies, then. There’s always something providing a “one-off effect” – that’s the nature of a technologically progressive society.
You did notice that economic growth was much more robust when marginal tax rates were higher, and that growth has been weakest under the low tax regimes of the GOP, I’m sure.
The problem is that one can typically point to specific circumstances that allowed for more robust growth despite those high tax rates. That in no way implies that those tax rates were optimal.
Again, it’s that darn “one-off effect” isn’t it? So the mere fact that higher taxes are associated with higher economic growth rates is an illusion of “specific circumstances”. Got it.
The more direct comparison is to compare the US’ growth with Europe’s growth over the past 30 years since Reagan, since both regions had the opportunity to take advantage of or be disadvantaged by the macroeconomic setting.
Really? So the “specific circumstances” of the US couldn’t possibly cause a “one-off effect”? Even though Europe has been densely settled for centuries, and the USA has been freshly wrenched from native peoples? Interesting choice of comparison – but completely unrealistic.
The US has had about a 1% point/year growth advantage over that time, which means that even if both had started from the same place, the US economy would be double the European economy in a mere 72 years, about the average human lifespan. How anyone could be against policies that would lead to that outcome is beyond me.
It depends on whether one accepts your ludicrous comparison to start with. There are plenty of factors that provide the US with “one-off effect” advantages over Europe. Unfortunately most of the recent benefits have accrued to the rich in the US, which has inhibited economic growth by preventing the growth of the middle class. Economic growth is more robust with marginal tax rates at higher levels. It’s the nature of the market – higher marginal tax rates drive reinvestment and prevent profit-taking from weakening companies. If the government is going to provide incentives to the economy, cutting marginal tax rates is one of the most perverse things one can propose given today’s rates in historical perspective. Progressive taxation is good for the economy.
Peace.
DS
