Apparently earlier this year the Congressional Research Service (CRS) issued a report on the correlation between the top marginal tax rates and economic growth. Spoiler alert, the report found no correlation between lowering the top marginal tax rate (the rate on the so-called job creators) and an increase in overall economic activity. This result, of course, runs counter to the main thrust of the current Republican economic policy, which is to push for lower taxes on “job creators” in order to create more jobs.
So what did the Republicans in Congress do when they got the report? They demanded that the CRS withdraw the report. And since the CRS works for Congress, and Republicans are in the majority, they CRS had no choice but to withdraw the report.
But there is magic in the internet. Things really don’t disappear, so the report is available here.
The New York Times story is also available here.
The overall conclusion of the report:
The top income tax rates have changed considerably since the end of World War II. Throughout
the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%.
Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s;
today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until
the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income
distribution are currently at their lowest levels since the end of the second World War.
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. The reduction in
the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The
top tax rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the increasing concentration of
income at the top of the income distribution. As measured by IRS data, the share of income
accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before
falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the
top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to
how the economic pie is sliced—lower top tax rates may be associated with greater income