Tuesday, September 18, 2012

More Important Than Mitt

Mitt Romney said something either really, really callous or really, really stupid yesterday (or both). But in a way it is almost too bad that it happened when it did because I was starting to see a report from the Congressional Research Service (a non-political unit of the Library of Congress) circulate that takes on the real issue with Romney's comments. The report is titled Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945, and what it really does is show us that there is absolutely no truth the decades long argument from Republicans that lower taxes for the wealthy mean a stronger economy. You should read the whole report, but the most important part is here:

The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. 
However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.
In other words, decreasing taxes for the wealthy does virtually nothing for anyone except the wealthy themselves. This, to me, is a pretty important piece of evidence to think about when you hear Mitt Romney talk about the 47% and how they don't contribute to society. The truth is, Republicans have been on a 40 year quest to ensure the 1% contribute less and less to society, and in the meantime create a nation where the 47% grow in ranks.

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