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Study: Tax cuts for the rich don’t spur economic growth

There’s NEW EVIDENCE that the centerpiece of Mitt Romney’s proposed fiscal policy is based on hokum:

There is no clear correlation between tax cuts for high earners and economic growth, according to a new study by Congress’ nonpartisan policy analyst.

“There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth,” concluded a report by the Congressional Research Service released Friday. “Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth.”

(Snip)

The study delves into the last 65 years of U.S. tax policy pertaining to high earning Americans — including top marginal rates on income and capital gains taxes — and how it impacts their decision-making. The conclusion: cutting effective taxes on the rich doesn’t boost economic growth, but it does correlate with rising income inequality.

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4 Comments

  1. Oh yes, reduce their taxes and watch the money flow from George Town and Geneva to US jobs.

  2. I couldn’t find a defintion in the article of what income levels these marginal rates applied to.

    Nonetheless, what is important is tax revenue as percent of GDP. We certainly don’t collect as much as some other countries, but there are many countries that collect much higher of a percentage and have greater fiscal difficulty.

    In order to address our problems we will need to balance increase revenue with decreased spending. We can either collectively choose to do it now or we will be forced to do it later.

    http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

  3. Luke Fredrickson

    Trickle down your leg economics is a proven failure – just ask David Stockman himself.

    http://peacecorpsworldwide.org/popular-freakonomics/tag/reagan-budget-director-david-stockman/

  4. At least your link provides the answer to my question ( I think).

    It mentions either the top 400 earners (multi billionaires) or the top .1% of earners ( greater than 1.7 million annually).

    Unfortunately, to my knowledge, that is not the defintion that the Obama administration has been talking about.

    http://abcnews.go.com/blogs/politics/2012/04/behind-obamas-definition-of-wealth-and-paying-off-student-loans-2/

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