Topic > Taxes and Economic Growth - 1213

The idea that taxes influence economic development has become controversial at the government level and the subject of much discussion in the press and among advocacy groups. This is partly because there are challenging theories about what the ambitions of economic growth are. The Congressional Research Service discovered funding for the philosophy that taxes have no effect on economic growth by looking at U.S. involvement since World War II and the intense variation in the constitutional maximum marginal tax rate on individual income. They find that the fastest economic growth occurred in the 1950s, when the peak rate was above 90%. However, their study overlooks more basic problems related to the type of statistical analysis, including: the deviation in the tax base to which the individual income tax belongs; the change in other taxes, mainly corporate tax; the short- and long-term effects of fiscal policy; and reverse causality, while economic growth affects tax rates. These problems are all well recognized in the academic literature and have been eliminated in numerous ways, making the CRS study publishable in any peer-reviewed academic journal. Although there are many different parts of methods and data sources, the results consistently highlight financial aspects. to the substantial negative effects of taxes on economic growth even after controlling for many other factors such as government spending, business cycle conditions, and financial policy. I believe that the studies, going back to 1983, and all three of these studies, and every study over the last 15 years, have a destructive effect of taxes on growth. The following studies distinguish between types of taxes such as; Corporate income taxes are found to be the most harmful, followed by personal income... in the middle of the paper... that government spending is too high and that the US economy could expand much faster if the government burden were reduced. Having a reasonable and more basic tax system would promote economic growth, improve productivity and broaden international competitiveness. Economic growth is absolutely necessary in our economy, and while there may be some concerns about moving our tax formation to such a system, this would resolve the ambiguity for businesses. Every year there are new developments in our tax structure, rules and regulations. The current system develops doubts that prevent companies from creating investments or expanding their business as well as hiring new workers. Because more people are employed, more money is accessible to purchase products and services which, in an encompassing tax system, produce more revenue for the federal government's responsibilities.