Tax Cuts For Rich Don’t Spur Growth
Tax Cuts For Rich Don’t Spur Growth, There’s “little evidence” to support an often-made claim, says a study from a non-partisan group. Study: Tax Cuts for the Rich Don’t Spur Growth, 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.