New Academic Research Confirms the “High Price” of High Tax Rates

July 6, 2013

The takeaway: lower tax rates for “the rich” — the job creators and business builders– are better for all concerned, rich and not-rich. Too bad empirical results never seem to penetrate the Left’s need to be “fair.”

International Liberty

I periodically cite new academic research about tax policy and economic activity. I sometimes even publicize research from international bureaucracies showing the link between taxes and growth.

I’m not naive enough to think that any particular study will change minds, but when the bulk of the research unambiguously tells us that lower tax rates are better for economic performance, I think (or at least hope) that it may have some impact on government officials.

Which is why I’m particularly interested in some new research by Professor Karel Mertens from Cornell University.

Here are some key findings from Professor Mertens’ study, beginning with some observations on existing research.

To what extent do marginal tax rates matter for individual decisions to work and invest? The answer is essential for public policy and its role in shaping economic growth. The strand of the empirical literature that uses tax return data…

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