This is another thing that is true as far as it goes, but as an isolated fact is very misleading. It's often mentioned in connection with fixing our debt problems.
Yes, raising taxes on the wealthy will in fact reduce growth.
But, raising taxes on anyone will reduce growth.
Even worse, cutting government benefits to anyone will reduce growth.
The deal is, reducing deficit spending reduces growth!
You have to either increase taxes or decrease government spending (or some of both). And anything you do like that reduces growth.
Real economists have done careful analyses of how much different kinds of deficit reduction hurt growth. But they all hurt growth.
That is why we shouldn't balance the budget right now, as we
are struggling to come out of the Great Recession. (Written in 2014.)
Besides, the current annual deficit is not an emergency; it's the long-term deficit that's the problem.
The right thing to do is wait until the unemployment rate is back down to "normal", and then bring the budget into balance. (As of late 2016, we seem to be at "normal" levels.)
Back to the list of economic myths