Fun with Charting Tax Rates and Growth

Just for fun, I plotted the top marginal federal tax rate from 1947 through 2006 against real GDP growth for each year. Here is what I get:



GDP data come from BEA; Federal Tax Data from Brookings and the Urban Institute. The correlation is actually slightly positive (about .098). I am not suggesting that higher marginal tax rates cause economic growth. But it is awfully hard for me to see where a ten percent increase in marginal tax rates for the wealthiest among us will bring about economic ruin.