“Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth…Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years…” – Paul Krugman
Paul Krugman has once again attempted to deceive his readers—sorry, reader—into believing that the absurdly high tax rate of the 1950’s was what drove the economy, and the United States to prosperity. Krugman comes to this conclusion by cherry picking data. Surprise! His analysis is so overly simplified that even I—by no means an expert on economics—can see through it.
Basically, Krugman’s argument goes like this: the economy boomed in the 1950’s, the tax rate was very high (up to 91% for some), so the boom was a result of high taxes. It’s as simple as one, two…seven?
Krugman deliberately leaves out any other factors which would invalidate his theory, such as the fact that the 1950’s saw a post-war economic boom. The United States was a force to be reckoned with in terms of post-war manufacturing momentum. According to the National Bureau of Economic Research:
“At the end of World War II, the United States was the dominant industrial producer in the world. With industrial capacity destroyed in Europe—except for Scandinavia—and in Japan and crippled in the United Kingdom, the United States produced approximately 60 percent of the world output of manufactures in 1950, and its GNP was 61 percent of the total of the present (1979) OECD countries. This was obviously a transitory situation.”
During the 1950’s, the United States also suffered two recessions. Multiple recessions aren’t indicative of a strong economy. Finally, a side-by-side, comparing tax revenues as a percentage of GDP indicates that the high taxes of the 1950’s weren’t producing as much money as the Left would like to believe. From 1951-1963, when the top tax rate was 91%, the revenue as a percentage of the GDP was 7.7%. From 1997-2002, when the top tax rate was 39.6%, the revenue as a percentage of the GDP was 9.4%.
There were multiple factors influencing the economy of the 1950’s; I’ve just mentioned a few. There were certainly many more pieces in play than Paul Krugman wants you to believe. But giving you a more complete picture doesn’t fit inside Krugman’s agenda. Paul Krugman is a bastion of liberalism. He wants a world in which the rich “pay their fair share.” In fact, that’s the sentiment on which he ended his article:
Paul”America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again.”
The rich are the enemy. Economic disparity isn’t anyone else’s fault. The wealthy don’t deserve what they have, so let’s take it away, give it to the poor, and we will have a perfect society. That is Krugman’s ideology in a nutshell (emphasis on nut). He uses the 1950’s as an example to promote his agenda, but forgets that we live in a world in which anyone can google. All it takes is one swift search to understand that the high tax rates of the 1950’s aren’t the golden ticket to economic success. There were many factors at play, some of which indicate that the high tax rate was, in fact, harmful.
Krugman is liberalism personified. They have no facts, or evidence on which to base their outlandish ideology, so they make stuff up. The draw incomplete pictures, and puff smoke to hide the truth.
Try again, Krugman.