Monday, September 17, 2012
Tax Rates for the Rich, and Economic Growth
A new report by the Congressional Research Service (an excerpt of the conclusion is here) shows that since the end of WWII, the capital gains tax rate has not been correlated with economic growth. Moreover, the study found that the tax rate on the richest Americans may be indirectly correlated with income inequality. It is somewhat ridiculous that a study had to be done in order to come to these conclusions, especially the latter one. By default, the effect of a progressive tax is income redistribution. Then again, perhaps the ridiculousness of the conclusions reached explains the necessity for such a study, as evidently politicians know very little about how economics works. Hopefully these findings, by an unbiased source, will inform future policy decisions.
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"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." I agree that politicians know little about taxes and economy growth. http://www.nytimes.com/2012/09/16/opinion/sunday/do-tax-cuts-lead-to-economic-growth.html?_r=1 this article "Do Tax Cuts Lead To Economic Growth" the author claims that tax cuts can slow economic growth, and how Romney and Ryan are planning to have tax cuts, but haven't given the reason why or how it could create economic growth.
ReplyDeleteI agree with Karl that the objective of this study seems to be to draw some attention to the tax distribution and inequalities that Americans face today. People consider and discuss the issues of taxes on a very consistent basis. However, very rarely do you see a set of unbiased statistics such as these that shed some light on the actual situation. Hopefully reports such as these will better inform both the general public and politicians about the true state of the American economy.
ReplyDeleteThis study has some signs of objectivity to it, if not from the Congressional Research survey, certainly from the New York Times. The way the story is presented we focus on income inequality growth, and the decreasing elite tax rates. These two numbers side-by-side paint an interesting picture of how our economic policy has played out historically, if nothing more. Clearly there are a myriad of other factors that could have swayed these numbers. But it certainly goes to show that lowering elite tax rates, has done little-to-nothing for overall income distribution.
ReplyDeleteYou all bring good points but and Andrew especially, saying how there are many more factors as it is indirectly correlated. There is obviously a correlation that we didn't need a study to show and that is just how it has been. It nice to finally get something out to the public and things can change in the future. It really does not redistribute the income at all, just take more from the richer which does not do anything.
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