There are few easy answers in economics. The Great Debates are always ongoing; Marx and Smith, Friedman and Keynes. This cycle can be frustrating for students of the “dismal science” who have been conditioned to expect clear and unequivocal facts. Harry Truman was reputed to have once said “I want a one armed economist! Every time I ask an economist a simple question they tell me on one hand we have this, but on the other….”

Barring Truman’s frustration, there is no reason to lose hope. An attempt should be made to isolate a single issue into a binary dichotomy and reduce the contentious issue to a simple yes or no. The question that must be answered is this: Do marginal income tax rates affect the GDP in any statistically significant way?

Relationship

If the null hypothesis; Top Marginal Income Tax rates affect GPD, is not rejected, then profound implications for the perception of economic policy would follow. Tax policy could be altered without concern for diminishing future growth, and therefore future revenues. This would grant additional flexibility to economists concerned with projecting future earnings.

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