Correlation Means Something

Check out this article, “Rich People’s Taxes Have Little to Do with Job Creation” from the Center for American Progress.  It is another nail in the coffin of the idea that taxes on the rich slow job creation.

Republicans, and some Blue Dogs, make the claim that there exists a correlation between taxes on the rich and job creation.  They say, “If you tax the rich, the economy will have fewer jobs.  There is a negative correlation between the rates of taxes on the rich and the rate of job creation.”  The article points out that the economy has had its most successful employment growth in years in which the top marginal rate was much (sometimes much much) higher.  In other words,

In fact, they are just as wrong about this as they are about the relationship between marginal tax rates and overall economic growth. In the past 60 years, job growth has actually been greater in years when the top income tax rate was much higher than it is now.

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We showed last week that lower rates are not associated with faster overall economic growth—just the opposite, in fact. And now we know that lower rates don’t coincide with higher job growth, either. So where is the evidence that the lower marginal tax rates spur job creation? It’s certainly not present in the past 60 years of American history.

The article is not making a causality claim here.  It is making a counter-correlation one – “The correlation is positive between tax rates on the rich and job creation.”  This truth does not mean that higher tax rates cause job growth.  It means that no one can argue that higher tax rates on the rich hurt the economy.