What Really Is the Evidence on Taxes and Growth?
A 2012 Tax Foundation report asserted that “nearly every empirical study of taxes and economic growth published in a peer-reviewed academic journal finds that tax increases harm economic growth.”
[2] The report cited 26 studies (19 on the impact of federal or national taxes on national growth and seven on the effects of state taxes on state growth), claiming that 23 of them find that taxes have a “negative” effect on economic growth, while the other three find a “neutral” effect. A previous CBPP analysis found that the Tax Foundation misrepresented the findings of three of the seven state-level studies it cited.
[3] This analysis looks in detail at the 19 national-level studies and finds:
- The Tax Foundation mischaracterized, exaggerated, or selectively described the findings of six of those 19. When one adds to these six studies the three state-level studies that the Tax Foundation misrepresented and the three studies that the Tax Foundation correctly identified as showing a “neutral” effect of taxes on growth,12 of the 26 studies that the Tax Foundation cites do not support its flat assertion that tax increases harm growth.
- The Tax Foundation’s review omitted dozens of relevant studies published in major journals or edited compilations since 2000, many of which conclude that levels of taxation have little if any impact on economic growth or that adverse impacts are limited to particular taxes or time periods.
- The Tax Foundation’s assertion of a growing “consensus among experts” that taxes harm growth is false. In fact, studies that the Tax Foundation cited, as well as others that it omitted, explicitly note the lack of academic consensus.
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Half of National Studies Cited Do Not Fully Support Tax Foundation Claim
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Tax Foundation Review Omitted Recent Studies That Contradict Its Claims......
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In other words, someone had employed a republican mind at the Tax Foundation.
