Professor King Banaian of the SCSU Economics Department has an interesting post on his blog, here. The Organization for Economic Cooperation and Development (OECD) has tables of value added taxes in effect in OECD countries. King’s contention is that if we go ahead with planned tax rate hikes that could possibly put our top marginal rate at 50%, we’d be near the same rates as Italy and France, which are ranked low for 1988-2007 average GDP growth rates. Do the tax rates have any bearing on OECD GDP growth rates averaged over the past 20 years? The data does not make a compelling case for this argument:
The x-axis represents the OECD rank in economic growth. If the tax rates decided the growth rate, the higher ranked countries (1, 2, 3, etc.) on the left would have the lowest tax rates, and the lower ranked countries (28, 27, 26, etc.) on the right would have the highest tax rates. That’s not the case. (Or is my analysis of the data incorrect?)
Update: And here’s the graph not made at 2 AM, with regression line. Unfortunately, I can’t get WordPress not to crop. Hmm..