Monday, November 05, 2012

Tax cuts for the rich don't really promote investment, but the Republicans continue to insist they do

The Republicans got so upset about a Congressional Research Service (CRS) report refuting a favorite Republican talking point that had already been refuted many times over that Mitch McConnell bullied them into official withdrawing the report. (Jonathan Weisman, Nonpartisan Tax Report Withdrawn After G.O.P. Protest New York Times 11/01/2012)

The report is Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945 by Thomas Hungerford 09/14/2012.

Paul Krugman wrote of the report, "when the CRS report first came out I didn'’t write about it because it was basically old news (which is not to criticize the report, which did a fine job of putting the evidence together). Nobody has ever been able to find clear evidence of a link between high-end tax cuts and growth." (The Ultimate Zombie Idea) 110/03/2012.

This is further evidence, as though we needed any, of the strong authoritarian streak in today's Republican Party. Andrew Rosenthal commentede in Ideology Over Reality New York Times 11/02/2012, "The CRS is a highly respected, independent agency that prepares reports for members of Congress and routinely issues findings that disappoint or even irritate their clients, who usually just grin and bear it, or at least bear it. But Congressional Republicans seem to think that the CRS should function like Pravda."

Brendan Greeley reports on a presentation at a recent joint hearing of the Senate Finance and House Ways and Means Committees dealing with lower relative rates on capital gains, which gains are heavily concentrated among the wealthiest (Study Finds Benefit Is Elusive for Low Capital Gains Rate Bloomberg 10/04/2012):

Leonard Burman, who teaches economics at Syracuse University’s Maxwell School, presented a graph at the joint hearing that plotted capital gains tax rates against economic growth from 1950 to 2011.

He found no statistically significant correlation between the two. This was true even if Burman built in lag times of five years. After several economists took him up on an offer to share his data, none came back having discovered a historical relationship between the rates and growth over those six decades.

"I certainly did throw the gauntlet down for the true believers," says Burman. "If they found the relationship, they’re saving it for a special time."
Greeley notes, "Data from the Tax Policy Center shows that 70 percent of long-term capital gains go to the top 1 percent of earners, and that 47 percent goes to the top 0.01 percent."

As Krugman concludes:

Yet the tax-cut dogma remains politically intact, and it is at the core of Romney’s alleged plan for recovery.

There is, of course, no mystery here: just ask who benefits from the dogma that ever-lower taxes on the wealthy are just what we need, and you understand why there is always plenty of money for both economists and politicians who promote the dogma.

But it’s kind of sad to realize that our public discourse is so obviously, nakedly corrupt.
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