I hate half-assed analysis in newspapers that is published in order to foster an agenda.
There is a relationship between tax rates and economic growth that is completely ignored by this G&M article.
Let's look at the whole picture and let's begin the comparison in 1981 when Reagan took the US on a different course from the rest of the major Western economies.
In 1981, the GDP per capita of the US was $26,005
In 1981, the GDP per capita of Canada was $23,708
In 1981, the GDP per capita of Germany was $21,243
In 1981, the GDP per capita of France was $20,325
In 1981, the GDP per capita of Italy was $18,973
Let's normalize the numbers with the US set to 100.
In 1981, the GDP per capita of the US was normalized to 100
In 1981, the GDP per capita of Canada was 91.17
In 1981, the GDP per capita of Germany was 81.69
In 1981, the GDP per capita of France was 78.16
In 1981, the GDP per capita of Italy was 72.96
In 2008, the GDP per capita of the US was $43,250 (normalize to 100)
In 2008, the GDP per capita of Canada was $36,123 (83.52)
In 2008, the GDP per capita of Germany was $33,663 (77.83)
In 2008, the GDP per capita of France was $30,624 (70.81)
In 2008, the GDP per capita of Italy was $28,245 (65.31)
So, to put the numbers into perspective.
If the US had instituted Canadian policies and tax rates back in 1981 and followed the same policies and tax rates that Canada implemented in the period between 1981 and 2008, the present US per capita income of $43,250 would be $39,622, an 8.5% reduction in income.
If the US had instituted German policies and tax rates back in 1981 and followed the same policies and tax rates that Germany implemented in the period between 1981 and 2008, the present US per capita income of $43,250 would be $41,209, an 4.75% reduction in income.
If the US had instituted French policies and tax rates back in 1981 and followed the same policies and tax rates that France implemented in the period between 1981 and 2008, the present US per capita income of $43,250 would be $39,182, a 9.4% reduction in income.
If the US had instituted Italian policies and tax rates back in 1981 and followed the same policies and tax rates that Italy implemented in the period between 1981 and 2008, the present US per capita income of $43,250 would be $38,713, a 10.5% reduction in income.
Look at how far each of those countries has slipped over the last generation, especially Canada, which had a 1981 per capita income that was 91.17% of the US level and in 2008 it had slipped to an income level that was only 83.52% of American levels.
TAX RATES AFFECT ECONOMIC GROWTH.
The US and Mexico, back in colonial days had nearly identical GDP per capita figures. We were equally wealthy. Over the ensuing two hundred and fifty years the US simply grew its economy a half percent or so faster than Mexico and look at the result today. We started off with equal levels of wealth and today the