Study: Tax Cuts for the Rich Don't Spur Growth

Status
Not open for further replies.

rockin'robin

Well-Known Member
Joined
Apr 22, 2007
Messages
24,433
Reaction score
544
Cutting taxes for the wealthy does not generate faster economic growth, according to a new report. But those cuts may widen the income gap between the rich and the rest, according to a new report.

A study from the Congressional Research Service -- the non-partisan research office for Congress -- shows that "there is little evidence over the past 65 years that tax cuts for the highest earners are associated with savings, investment or productivity growth."

In fact, the study found that higher tax rates for the wealthy are statistically associated with higher levels of growth.


The finding is likely to fuel to the already bitter political fight over taxing the rich, with President Obama and the Democrats calling for higher taxes on the wealthy to reduce the deficit and fund spending. Mitt Romney and the GOP advocate lower marginal tax rates for top earners, saying they fuel investment and job creation.

The CRS study looked at tax rates and economic growth since 1945. The top tax rate in 1945 was above 90 percent, and fell to 70 percent in the 1960s and to a low of 28 percent in 1986.

The top current rate is 35 percent. The tax rate for capital gains was 25 percent in the 1940s and 1950s, then went up to 35 percent in the 1970s, before coming down to 15 percent today - the lowest rate in more than 65 years.


Lowering these rates for the wealthy, the study found, isn't aligned with significant improvement in any of the areas it examined. Pushing tax rates down had a "negligible effect" on private saving, and while it does note a relationship between investing and capital gains rates, the correlations "are not statistically significant," the study says.

"Top tax rates," it concludes, "do not necessarily have a demonstrably significant relationship with investment."

The study said that lower marginal rates have a "slight positive effect" on productivity while lower capital gains rates have a "slight negative association" with productivity. But, again, neither effect was considered statistically significant.

Do higher taxes on the rich lead to faster economic growth? Not necessarily. The paper says that while growth accelerated with higher taxes on the rich, the relationship is "not strong" and may be "coincidental," since broader economic factors may be responsible for that growth.

There is one part of the economy, however, that is changed by tax cuts for the rich: inequality. The study says that the biggest change in the distribution of U.S. income has been with the top 0.1 percent of earners - not the one percent.

The share of total income going to the top 0.1 percent hovered around 4 percent during the 1950s, 1960s and 1970s, then rose to 12 percent by the mid-2000s. During this period, the average tax rate paid by the 0.1 percent fell from more than 40 percent to below 25 percent.

The study said that "as top tax rates are reduced, the share of income accruing to the top of the income distribution increases" and that "these relationships are statistically significant."

In other words, cutting taxes on the rich may not grow the economic pie. But the study found that those cuts can effect "how that economic pie is sliced."

Study: Tax Cuts for the Rich Don't Spur Growth - Yahoo! Finance
 
that's why The Man was right.......
 
No new taxes for the unemployed!
 
In my book raising the taxes on the rich won't stimulate the economy much at all. It will have a negative effect on unemployment though. The less they make the less they will employ! How about just spending our money wiser and much less waste?! How about a fair tax that everyone pays?! Smaller government means more money for our needs not wants! Praying for a little hope and change and not the kind of the past four years!
 
I believe that rich people should pay higher tax rate.
 
All visitors working in the US should have half their paycheck withheld for taxes.
 
In my book raising the taxes on the rich won't stimulate the economy much at all. It will have a negative effect on unemployment though. The less they make the less they will employ! How about just spending our money wiser and much less waste?! How about a fair tax that everyone pays?! Smaller government means more money for our needs not wants! Praying for a little hope and change and not the kind of the past four years!

If rich people own small businesses so they do get tax cut or tax incentive, so they don't pay much as other rich people don't own businesses.

Cut the spending only will not solve the budget deficit nor is debt so you have cut the spending, combined with tax increase.

Smaller government? our government is smaller to my taste.
 
Anytime there is a deficit, members of congress should be required to elect a salary of zero dollars and also pay out of pocket for their medical insurance.
 
All income should be capped at $100,000 (per taxpayer). Anything above and beyond shall be collected as tax.
 
Anytime there is a deficit, members of congress should be required to elect a salary of zero dollars and also pay out of pocket for their medical insurance.

That's too radical, IMO.

I think that make $174,000 is too much so they may need cut to less than $100,000 per year, along with 30%+ contribution on health insurance, just like average Americans pay.
 
All income should be capped at $100,000 (per taxpayer). Anything above and beyond shall be collected as tax.

Ugh, average Americans only make $35,000 per year. :ugh:
 
Lets be fair. There are millions of Americans paying no taxes out of their pockets. Those who earn much should pay a fair share and those who earn little or nothing at all must also pay a fair share. It is totally wrong to expect one person to pay higher tax when others continue nothing at all out of their pocket. THE MAN is totally headed the wrong direction.
 
In my book raising the taxes on the rich won't stimulate the economy much at all. It will have a negative effect on unemployment though. The less they make the less they will employ! How about just spending our money wiser and much less waste?! How about a fair tax that everyone pays?! Smaller government means more money for our needs not wants! Praying for a little hope and change and not the kind of the past four years!

well - under fair tax, the rich people would be paying more taxes.
 
Lets be fair. There are millions of Americans paying no taxes out of their pockets. Those who earn much should pay a fair share and those who earn little or nothing at all must also pay a fair share. It is totally wrong to expect one person to pay higher tax when others continue nothing at all out of their pocket. THE MAN is totally headed the wrong direction.

It isn't make any sense for unemployed or anyone with no income to pay tax.

Who is "THE MAN"?
 
Lets be fair. There are millions of Americans paying no taxes out of their pockets. Those who earn much should pay a fair share and those who earn little or nothing at all must also pay a fair share. It is totally wrong to expect one person to pay higher tax when others continue nothing at all out of their pocket. THE MAN is totally headed the wrong direction.

How do you expect those who earn little or nothing at all to pay a fair share?
 
It isn't make any sense for unemployed or anyone with no income to pay tax.

Who is "THE MAN"?

Where does my post say I'm speaking of the unemployed? It does not.
There are people who have lived on entitlements all their life and have paid no taxes because of that. This is totally unfair to all Americans.
 
Where does my post say I'm speaking of the unemployed? It does not.
There are people who have lived on entitlements all their life and have paid no taxes because of that. This is totally unfair to all Americans.

correct me if I'm wrong. majority of people you're speaking of are either permanently disabled or living in poverty, yes?
 
Status
Not open for further replies.
Back
Top