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A couple months ago, under pressure from Republicans, the Congressional Research Service, basically the think tank of Congress, took down a study on tax rates for the rich and the economy that rebutted a key GOP argument, that tax cuts at the top spurred economic growth. It didn’t matter that the Congressional Budget Office found almost the same thing, Republicans didn’t want in print a study showing no relationship between tax cuts for the rich and growth. That would ruin their whole program.
Yesterday, the CRS republished the work, and while a bit of the language has changed – Republicans reportedly objected to the phrase “tax cuts for the rich” – the conclusion is exactly the same. These are pretty much all the changes:
But many of the changes reflect the GOP’s criticism of the original report. Republicans were incensed that the original report referred to “tax rates on the rich,” which the CRS has revised to “high-income taxpayers.” The new version of the CRS report is also padded with new citations to research in support of Republicans’ view that tax cuts view economic growth.
In the original report, for instance, the report says that “some have argued that raising tax rates, especially on higher-income taxpayers, to increase tax revenues is part of the solution for long-term debt reduction.” The new report pairs this statement (“On the one hand …) with the contrary view (“On the other hand, others argue that maintaining low tax rates is necessary to foster economic growth”), citing a House bill for extending the Bush tax cuts that had originally just been a footnote.
The revised report also includes a new section called “methods” that details how the researcher, Thomas Hungerford, went about examining the correlation between tax rates and economic growth.
So a little language has changed, and Hungerford shows his methodology. The bottom line is that “The results of the analysis suggest that changes over the past 65 years in the top margin rate and the top capital gains tax rate do not appear correlated with economic growth,” as House Democrats point out. CRS maybe had to look to future budgets, and make nice with Republicans. That in itself is a bit troubling. But the report shows exactly what it showed in September.
Even a majority of rank and file Republicans support the increase to the Bush tax rates above $250,000. They now have some academic strength behind that position.
Photo by Rob Crawley under Creative Commons license.
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This is entirely predictable if you look at Mark Zandi’s multipliers. Bush tax cuts have an multiplier of .29, meaning that the GDP improves by 29 cents for every dollar lost to those tax cuts. By contrast, the payroll tax holiday has a multiplier of 1.29, meaning that the GDP improves by $1.29 for every dollar lost to the cut.
The multipliers are very Keynesian: spending and tax cuts that benefit the rich have about a quarter of the effect that those that help the poor have. For example, the highest multiplier is Food Stamps at 1.74.
Duh!
Who could of seen this coming? Next up: Terrorists plan attack on World Trade Center on 9/11/01! And, No Weapons of Mass Destruction Found in Iraq!!! Geez, what a shocker. Keynesian Economics starting to make sense after all, even in Congress.
However, very recent history shows a direct correlation between the Bush/Obama tax cuts to the most wealthy and higher unemployment, slow job growth and loss of hundreds of thousands of jobs. It is a lie that taxing the most wealthy an additional 4.6% will slow job growth. Them having the additional money now and for the past 10 years has not helped job seekers. Job growth has been JOB LOSS for a long time with the tax cuts to the most wealthy. Tired of the con jobs and lies. The best correlation is tax cuts to the most wealthy = jobs lost.
Study finds death leading cause of funerals.
Study finds that boxers who get hit in the head the most suffer most concussions.
Yes, we have 10 years of evidence that tax cuts for the wealthy and big biz don’t bring job increases. Were that true, we would have near 0% unemployment right now. Tax cuts for the wealthy means more money in their pockets and less in our pockets. The job loss comes about from tax benefits for US companies for shipping their jobs out of the states (I have never understood that) and the fraudulent and criminal acts by the banksters tanking the economy and then being rewarded by bail-outs with no strings attached.