STUDY: TAX CUTS ARE LINKED TO INCREASED INCOME INEQUALITY, NOT 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.”

Well into the 1950s, the top marginal tax rate was above 90%.

Today it’s 35%. But both real GDP and real per capita GDP were growing more than twice as fast in the 1950s as in the 2000s.

At the same time, the average tax rate paid by the top tenth of a percent fell from about 50% to 25% in the last 60 years, while their share of income increased from 4.2% in 1945 to 12.3% before the recession.

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