Since the late 1970s, during the Carter Administration,
conservative economists have been warning that high taxes retard
economic growth by discouraging productive work and investment.
These arguments have resonated with politicians, who have
steadily cut income taxes, especially those borne by the richest
Americans. The highest marginal tax rate, which stood at 70% by
the end of the 1970s, was cut to less than 30% in less than a
decade. (The marginal rate for a person is the one applied to
his or her last dollar of income. A marginal rate that applies
to, say, the bracket above $250,000, then, is paid only on that
portion of income. The portion of a person’s income below that
threshold is taxed at the lower rates applying to lower tax
brackets.) Despite increases in the early 1990s, the top
marginal rate remained below 40%, when it was cut further during
the administration of George W. Bush. These dramatic cuts in tax
rates, however, have not led to an acceleration in economic
growth, investment, or producti