From the “duh!” file:
It seems a study of economic literature from the Tax Foundation finds that higher taxes are a drag on economic growth, with 23 of 26 studies confirming this view, 3 seeing no relationship, and a big fat ZERO claiming that higher taxes help. (via Dan Mitchell at International Liberty and the Cato Institute: http://danieljmitchell.wordpress.com/2013/01/17/based-on-a-review-of-studies-looking-at-the-impact-of-taxes-on-growth-academic-research-gives-obama-a-record-of-0-23-3/
Here’s an excerpt from Dan’s blog post:
…results support the Neo-classical view that income and wealth must first be produced and then consumed, meaning that taxes on the factors of production, i.e., capital and labor, are particularly disruptive of wealth creation. Corporate and shareholder taxes reduce the incentive to invest and to build capital. Less investment means fewer productive workers and correspondingly lower wages. Taxes on income and wages reduce the incentive to work. Progressive income taxes, where higher income is taxed at higher rates, reduce the returns to education, since high incomes are associated with high levels of education, and so reduce the incentive to build human capital. Progressive taxation also reduces investment, risk taking, and entrepreneurial activity since a disproportionately large share of these activities is done by high income earners.
To be blunt, the report’s findings suggest the Obama White House is clueless about tax policy.
…there are not a lot of dissenting opinions coming from peer-reviewed academic journals. More and more, the consensus among experts is that taxes on corporate and personal income are particularly harmful to economic growth… This is because economic growth ultimately comes from production, innovation, and risk-taking.
To this, we who have a clue about economics say, “duh!” At the White House they say, “Who cares?!”