by Pamela Powers Hannley
A new financial study released last week-- Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945-- looks at 65(!) years worth of US ecomonic data and confirms what we 99%ers have been saying for a long time: Trickle Down Economics doesn't work, so get over it already.
From The Atlantic...
In 1990, President George H. W. Bush raised taxes, and GDP growth increased over the next five years. In 1993, President Bill Clinton raised the top marginal tax rate, and GDP growth increased over the next five years. In 2001 and 2003, President Bush cut taxes, and we faced a disappointing expansion followed by a Great Recession.
Does this story prove that raising taxeshelps GDP? No. Does it prove that cutting taxes hurts GDP? No.
But it does suggest that there is a lot more to an economy than taxes, and that slashing taxes is not a guaranteed way to accelerate economic growth...
Analysis of six decades of data found that top tax rates "have had little association with saving, investment, or productivity growth." However, the study found that reductions of capital gains taxes and top marginal rate taxes have led to greater income inequality. Past studies cited in the report have suggested that a broad-based tax rate reduction can have "a small to modest, positive effect on economic growth" or "no effect on economic growth."
To read more... check out these links.
Do Tax Cuts Lead to Economic Growth?
The New York Times
Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945
The federal study that started it all.