Sunday, August 21, 2011

More Lies the Right-Wing Wants You to Believe

Data's a bitch.  Seriously.  Kevin Drum takes the Teabag GOP to task over the assertion that capital gains taxes must be kept low to encourage investment.  Turns out there's no correlation between capital gains tax rates and rates of investment.
In the context we're using here, capital formation refers to capital used for investment purposes, so in its nickel version the argument for low capital gains rates is that it encourages capital to be invested. This is a good thing, and if it were true it would be a powerful argument for low taxes on capital gains. But it's not. Jared Bernstein provides the chart below, which shows the growth of investment over time (blue line) and the capital gains tax rate (red line):

Facts are such inconvenient things...

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