Or, as economists put it, “no shit, Sherlock.”
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.
The study delves into the last 65 years of U.S. tax policy pertaining to high earning Americans — including top marginal rates on income and capital gains taxes — and how it impacts their decision-making. The conclusion: cutting effective taxes on the rich doesn’t boost economic growth, but it does correlate with rising income inequality.
This is all very simple to explain: the conservative argument that employers hire as many people as they can afford is bullshit — just like you’ve always suspected. The fact is that the rich love money too much, so any extra money they get is saved, not spent. Meanwhile, consumers are the “job creators,” not employers. Employers hire as many people as they need — no more and no less. And the reason they need those employees is to meet consumer demand.
Republican economic arguments are nonsense. They’ve always been nonsense. The only reason they even exist is to counter liberal arguments — which in turn are the reality-based arguments. That conservative economic plans do nothing should surprise no one in the world.
