GOP Tax Cuts Defund the Very Things That Boost the Economy

Treasury Secretary Steven Mnuchin, left, and Gary Cohn, chief economic advisor to Donald Trump, speak at the White House in Washington, April 26, 2017. The Trump administration on Wednesday proposed sharp reductions in corporate income tax rates, cutting the number of individual tax brackets and slashing the tax burden on the rich. (Stephen Crowley / The New York Times)Treasury Secretary Steven Mnuchin, left, and Gary Cohn, chief economic advisor to Donald Trump, speak at the White House in Washington, April 26, 2017. The Trump administration on Wednesday proposed sharp reductions in corporate income tax rates, cutting the number of individual tax brackets and slashing taxes on the rich. (Stephen Crowley / The New York Times)

After eight years of complaining about “Obama deficits,” Republicans are proposing huge, dramatic, unprecedented tax cuts, especially for corporations.

President Trump wants the corporate tax rate cut from 35 percent down to 15, denying the government $2 trillion of revenue over the next decade. He is also proposing dramatic cuts to personal income tax cuts that will especially benefit billionaires like him.

Republicans call corporate tax cuts “pro-growth,” saying they will give the economy a boost. Trump’s Treasury Secretary says the plan will “pay for itself with economic growth.”

So now they’re for “stimulus”?

But here’s the real question: do tax cuts actually boost economic growth?

What Tax Cuts Actually Do

In 2012, the Congressional Research Service looked at data from past tax cuts and the effect they had on the economy, and issued a report titled Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945.  What did the study find?

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.

In fewer words: There is no evidence that tax cuts bring economic growth, but they do cause income to concentrate at the top.

That may sound bad, but, it’s even worse than that. Tax revenues build roads, bridges, airports, rail…

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