In his Nov. 2 op-ed column, "No tooth fairy on taxes," Robert J. Samuelson wrote: "Republicans contend that cutting rates will do the trick" to stimulate economic growth. This happened twice in the past 86 years.
The highest marginal tax rates since 1929 ranged between 25 percent and 94 percent, with an average of 62 percent, while gross domestic product growth averaged 3.4 percent. In those years when GDP exceeded 3.4 percent, the highest marginal tax rate average was 66 percent. In those years when the highest tax rate average was less than 30 percent, GDP fell 1 percent on average. When that tax rate was less than 40 percent, GDP grew on average a subpar 1.9 percent. Show me a low-tax-rate year, and I will show you a year of weak economic growth.
The real trick was getting people to link low taxes with economic growth. History shows the opposite is true. Government expenditure by definition comprises part of GDP. Spending circulates money through the economy. Spending is where growth comes from.
