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Eliot Spitzer - Looking at the Data

If last week was all about politics - and thankfully things turned out pretty well - maybe this
week we can put ideology and partisanship aside for a moment and apply a more objective,
scientific approach to some of the tough issues we face. What do historical records and data
suggest might be the better course for our nation to follow? Specifically, what is the impact of
increasing the top marginal tax rate on the rate of investment and job creation?
 
If numbers could persuade me that raising that rate injured job creation, I would reconsider my
belief that the wealthy should pay more - because job creation is issue one. On the other
hand, if the record established that raising the top marginal rate did not in any way injure
investment and job creation, then those who have been unalterably opposed should be forced
to reconsider their views as well. Analysis trumping ideology.
 
And we now have the analysis -- a fascinating report just issued by the Congressional
Research Service. The CRS is a non-partisan entity that produces academic quality research
to answer tough policy questions; its reports are put through a process of rigorous analysis
before they are released. The bottom line conclusion of the CRS report is this:
 

"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."

The report presents the sort of analysis many of us have been discussing for years, though
done much more rigorously: tax rates were at the highest when growth was at its peak, and
the reduction in rates has not had any discernible impact on the types of investment that lead
to growth. You can read the full report linked at our website.
 
Rather than acknowledge the findings, however, the Republican efforts have been directed at
having the report withdrawn. It is a fascinating story in its own right - reminiscent of a different
era , when news the government didn't like was simply suppressed. But leave that for another
day.
 
The important point here is the scientific conclusion reached by the study: raising the top tax
rate to 39.6% will not have any of the damaging consequences that the Grover Norquists of
the word suggest. A week after the political and ideological battle to support slightly higher
taxes on the wealthy was won, we now also have a numbers-based analysis supporting the
same course. Facts matter. And in this case, fairness wins.
 
That's My View.

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