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.”
The findings are pertinent to a central debate in the presidential election, wherein President Obama is pushing to end the Bush-era tax cuts on high incomes, while his Republican challenger Mitt Romney insists on cutting rates across the board 20 percent below current policy. Democrats contrast the tax hikes of the 1990s and ensuing economic growth with the tax cuts of the 2000s and relatively meager gains that followed. Republicans, meanwhile, argue that the recovery is weak because the economy remains shackled by regulatory and tax burdens.
Considering we’ve had 10 years and more than a trillion dollars of Bush tax cuts on the wealthy, if the trickle-down economic theory actually worked, we should be awash in jobs right now rather than hovering at a painful 8+% unemployment rate.
The study was conducted by a non-partisan Congressional policy analyst and looked back at more than 65 years of economic and tax data.
Read the full article at talkingpointsmemo.com.