Economics 101

For years, the Republican political talking points revolved around reducing taxes. Their argument was, in part grounded in theories that proclaimed that lower taxes would actually result in greater overall growth leading to higher total tax revenue. History has proven that this in not the case. From 1955 – 1970 the top marginal tax rate averaged 82.3% and during this time growth in GDP was 3.6%. From 1871 – 1980 the top marginal tax rate averaged 70% and the GDP growth during this period dropped to 3.2%. from 1981 – 2010, when top marginal tax rates dropped to 39.3% GDP growth fell to 2.8%. So much for theories. The other Republican talking point has the top 1 percent paying more than their fair share of taxes. The facts, however, say otherwise. Today top 1% of American households collect 21% of household income or 15% of GDP. They pay 31% of their income in federal taxes so net-of-federal-tax income is 10% of GDP. However, in 1970 top 1% collected 9% of household income or 6% of GDP. Then, they paid 47% of their income in federal taxes and net-of-federal-tax income was 3.3% of GDP. Since 1970 the top 1% of American households have seen after tax income as a percentage of GDP increase by more than 6% of GDP. Corporate tax revenue has also declined, from 3.5% of GDP in the 1960s to 1.5% of GDP today. Unfortunately, in the heat of political campaigns truth and actual facts are missing. We have been lied to for too long and cannot afford to continue to have to live with the results of their lies and misrepresentations.