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The Congressional Research Service recently released a study on the relationship of higher tax rates on the rich to economic growth.
This study shows that lower taxes for the wealthy make almost everyone worse off. But it didn’t connect the dots on how this is inevitably its conclusion.
The author was very cautious about how he worded the findings.  Here’s what the report concluded explicitly:
1.    There is no evidence that lower tax rates on high earners increase economic output.
2.    There IS good evidence that they cause increased economic disparity. They increase the share of income going to the top 1% and 0.1% of the income distribution.
3.    There is evidence that lower tax rates on the rich decrease the proportion of national income associated with labor.
What logically follows from this?
Let’s restate what the CRS study said: lower taxes on the wealthy don’t increase the size of the pie.
But they make the slice taken by the “1%” bigger.
These statements are in the study. Actually the details make the first point even stronger. There was statistically significant evidence that higher tax rates on the rich made the economy grow faster, but there was so much scatter in the data that the author dismissed this finding. So one could say that the study shoes lower taxes on the wealthy might well make the pie smaller.
Here is where we have to connect the dots ourselves.
If lower taxes for the high earners don’t increase the size of the pie, and may well make the pie smaller, and if a bigger slice goes to the 1%, then they make the slice of the “99%” smaller.
In simple English, the report concludes that tax cuts for high earners make the 99% worse off on average. (Note that CRS chose the 99% threshold: this does not come from Occupy or other leftist definitions.)

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Comment Preferences

  •  Math and Science (1+ / 0-)
    Recommended by:
    Roger Fox

    Are never true if they contradict the conservative worldview.

    "Political ends as sad remains will die." - YES 'And You and I' ; -8.88, -9.54

    by US Blues on Thu Nov 15, 2012 at 09:19:30 AM PST

  •  Ever since Raygun (0+ / 0-)

    The Republicans have tried to foist this 'Trickle Down" yellow rain on us since Reagan's people dreamed it up out of thin air.   It didn't work for Reagan.  It didn't work for Bush The Elder and it surely didn't work for Bush The Lesser.  So for 20 years of Republican rule, the fat cats got fatter at the expense of us little people.  
    Clinton believed in the middle class and the economy grew like gangbusters for eight years, only to be crushed by Bush the Lesser's return to the yellow rain theory.  We know where that leads.
    It's time to bury Reagan's theory (and legacy) once and for all.   Let the ill-advised Bush tax cuts for the Fat Cats expire and don't EVER renew them.  For that matter, let ALL of the ill-advised tax cuts expire, since us little people didn't get much benefit from them in the first place.  

  •  We've already experienced... (0+ / 0-)

    ...a decade of tax cuts that have helped to crater the economy (yet, all the while the wealthy did just fine).

    It's time the wealthy step up and give back for a change. I'll give them all the credit, too, but enough is enough. Complaining about tax hikes and threats of lay-offs are cowardly AND unChristian (oh ye so-called party of Jesus).

    What an obscene attitude that they see themselves as not wealthy enough. Jesus really would have fun at one of your gathering. Probably fit right in.

    Only the weak & defeated are called to account for their crimes.

    by rreabold on Thu Nov 15, 2012 at 10:44:06 AM PST

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