Tax Rates vs. Tax Revenues

As Congress and the administration debate the need for tax increases in the debt deal, economist and Mercatus scholar Antony Davies shows that historically, altering the top marginal income tax rate has had no effect on tax revenue as a fraction of GDP. The same is true for the average marginal tax rate, Social Security and Medicare tax rates, the effective corporate tax rate, and the capital gains tax rate. The following series of charts ilustrates these relationships: