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Tax Cuts For The Rich Do Not Spur Economic Growth: Study

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Newscom

The study delves into the last 65 years of U.S. tax policy pertaining to high earning Americans -- including top marginal rates on income and capital gains taxes -- and how it impacts their decision-making. The conclusion: cutting effective taxes on the rich doesn't boost economic growth, but it does correlate with rising income inequality.

"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%," wrote Thomas L. Hungerford, CRS' specialist in public finance and author of the report.

About The Author

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Sahil Kapur is TPM's senior congressional reporter and Supreme Court correspondent. His articles have been published in the Huffington Post, The Guardian and The New Republic. Email him at sahil@talkingpointsmemo.com and follow him on Twitter at @sahilkapur.