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The truth will set you free. Unless, that is, you're a Republican and the subject in taxes. As the New York Times reported on Thursday, "The Congressional Research Service has withdrawn an economic report that found no correlation between top tax rates and economic growth, a central tenet of conservative economy theory, after Senate Republicans raised concerns about the paper's findings and wording."

As documented in "15 Things the GOP Doesn't Want You to Know about Taxes and the Debt," virtually every article of conservative faith on tax cuts is demonstrably false. In contrast, what the yanked CRS report had to say on the history of tax cuts, productivity, investment, economic growth and job creation was indisputably true:

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 real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%.

There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth.

However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. 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. The evidence does not suggest necessarily a relationship between tax policy with regard to the top tax rates and the size of the economic pie, but there may be a relationship to how the economic pie is sliced.

As the Times reported, Republicans claim to have been irked by the report's use of such terms as "Bush tax cuts" and "tax cuts for the rich." Their real problem, of course, is with the truth.

Now, Republicans have warned for decades that that increasing tax rates on so-called "job creators" will hurt employment and slow economic growth. As it turns out, the economy grew faster and produced more jobs when upper-income tax rates were higher--even much higher--than today.

Continue reading below the fold.

That record prompted David Leonhardt of the New York Times to ask two years "Why should we believe that extending the Bush tax cuts will provide a big lift to growth?" His answer was unambiguous:

Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7...

Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.

Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade.

As ThinkProgress revealed in the charts at the top, the data are clear: lower taxes for America's so called job-creators don't mean either faster economic growth or more jobs for Americans.

It's no wonder Leonhardt followed his first question with another. "I mean this as a serious question, not a rhetorical one," he asked, "Given this history, why should we believe that the Bush tax cuts were pro-growth?"  Or as Mark Shields asked and answered in April:

"Do tax cuts help 'job creators' or 'robber barons'?"
As the quashed analysis by the Congressional Research Service shows, lower income and capital gains tax rates don't correlate with high economic growth. Higher income inequality is another matter:

The CRS report should have been uncontroversial. But as just the latest analysis confirming that lightly-taxed job creators don't create jobs, just as tax cuts don't pay for themselves, the nonpartisan agency simply reported the truth. And apparently, it isn't setting Republicans free.

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Comment Preferences

  •  GOP has disconfirmation bias. (4+ / 0-)
    Recommended by:
    ColoTim, Bluehawk, ExStr8, George3

    Except they don't care to argue the matter. That just want to quash it.

    The GOP can't win on ideas. They can only win by lying, cheating, and stealing. So they do.

    by psnyder on Thu Nov 01, 2012 at 02:03:08 PM PDT

  •  OK, I get that the CRS works for Congress, but why (5+ / 0-)
    Recommended by:
    ColoTim, Bluehawk, ExStr8, oregonj, TracieLynn

    pull the report just because some Republicans whined about it?

    Granted, this is according to Wikipedia, but why pull a report that wasn't going to be made public anyway?

    CRS reports are widely regarded as in depth, accurate, objective, and timely, but as a matter of policy they are not made available to members of the public by CRS, except in certain circumstances. There have been numerous attempts to pass legislation requiring all reports to be made available online, most recently in 2012, but none have been enacted.

    I'm a Democrat - I believe that government has a positive role to play in the lives of ordinary people.

    by 1BQ on Thu Nov 01, 2012 at 02:05:42 PM PDT

  •  What gives them the right to force the report (4+ / 0-)
    Recommended by:
    Bluehawk, ExStr8, Hey338Too, TracieLynn

    to be quashed?  Doing so makes it a partisan issue (I realize to the Republicans everything is partisan because it's party above all).  The reason studies have peer reviews and are released impartially is just so there's no bias, but this wasn't like a regular peer-reviewed paper from a scholarly journal.  Still, it should be just as impartial to politics and as closely focused on real scholarship.

    Several someones got their panties in bunches and another scholarly endeavor gets scared and retreats.  The Democrats (and since it's still Harry Reid's Senate - and he should be able to tell the Republicans this) should tell the Republicans to stick it where their faux noise don't shine.  If they want to produce a counter-argument, they're welcome to commission their own study (they have plenty of "think tanks") and they can have it reviewed for accuracy.  I'll bet theirs is laughed out of the room, while this one should be entered into the Congressional Record.

    I could edit the report to say "the tax cuts of 2001 and 2004" and "taxes on the top 1% of incomes" if that's all it would take to overcome the Republicans objections, but they're not entitled to quash facts and substitute lies for facts.

  •  Excellent, very important diary. (2+ / 0-)
    Recommended by:
    oregonj, trumpeter

    Thanks so much.

    I hope everyone reads this and passes it on--
    the business editor of your local paper would
    be a great person to get it!

    Stonewall was a RIOT!

    by ExStr8 on Thu Nov 01, 2012 at 02:20:30 PM PDT

  •  Rs deny climate science, evolution... (1+ / 0-)
    Recommended by:

    Now they deny that their primary economic policy is a failure, which of course as the CRS Report demonstrates, it is.

    Pretty soon they will deny that they lost the Presidential election!!!

    "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."

    by oregonj on Thu Nov 01, 2012 at 02:21:35 PM PDT

  •  WOW Congressional Research Office not allowed (1+ / 0-)
    Recommended by:

    to speak the truth?

    And who's tax cuts were they if not Bush's?

    Lighter taxes on the rich and corporations only lead to more speculation and less reinvestment.  We need to have long term capital gain taxed at a low rate and short term capitol gains taxed at like 70% again to promote patient capital formation. We also need to stop giving capitol gains treatment to gains from financial arbitrage.   And we need a transaction tax to get rid of high speed trading which is nothing more than computer assisted frontrunning.

    To Goldman Sachs in according to their desires, From us in accordance with the IRS.

    by Bluehawk on Thu Nov 01, 2012 at 02:24:17 PM PDT

    •  Capital gains indexed (0+ / 0-)

      First 2 years 100% gain taxed as income and then 10% incrementally annually as capital gain until you reach 100%.

      Or else drop tax on gambling wins to 15% also, at least playing in a casino as a high roller gets you lots of discounted drinks, does your broker have a bar for the customers?

  •  The CRS study was un-quashed (2+ / 0-)
    Recommended by:
    T Maysle, susanWAstate

    by the Democrats, and is available at the Democratic Policy and Communication Center website.

    Public policy based upon superstition is never a good idea.

    by gerard w on Thu Nov 01, 2012 at 02:42:53 PM PDT

  •  What does it even mean (1+ / 0-)
    Recommended by:

    to quash a study that only Congress can see? It means it doesn't show up on a CRS index that only Congress can see. So the Repubs little tantrum made the report 10 times more famous and now it's on the intertubes in 10 times more places.

    Another case of Repubs whippin out the big guns and blasting their toes off.

  •  If the wealthy don't want (0+ / 0-)

    to pay high taxes then don't suck the revenue out of their businesses. Re-investment in capital goods is not taxed.

    Joe the plumber and other small businessmen "who did it all by themselves" can just buy some more service vans, stock their spare parts bins, and don't charge $4.50 for a 0.65 cent fuse.

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