With the election now behind us and the onslaught of extremism beaten back, we could be ready for a new era of sane, thoughtful policy. After all, now that President Obama no longer has to worry about getting re-elected, he can focus on those things he considers most important, regardless of whether they are popular or not. I think it’s safe to say that the things we consider important here at Triple Pundit, namely the triple bottom line of people, planet and profit, will be better served by an Obama administration, with whom we saw considerable progress (though we need much more), than we would have seen under Romney, who, among other things, spoke contemptuously of the green economy.
But first we have to get past the fiscal cliff. If we go over it, the Bush tax cuts will expire and across-the-board spending cuts, which were put in place as a kind of political ultimatum when Congress and the President were not able to reach a budget agreement last year, will go into effect. These changes will happen automatically at the end of this year unless a new agreement can be reached.
Speaker John Boehner, clinging fiercely to the Republican ideology that says any and all taxes are bad for the economy, has already said that he will not consider raising taxes on anyone. “The American people have … made clear,” he said as the election results came in, “that there is no mandate for raising tax rates.” Not everyone agrees, of course, and many people are happy to pay their taxes, understanding as they do, that it is part of the price each one of us pays for the privilege of living in the kind of civilized society, where, as Barack Obama says, “we accept certain obligations to one another and to future generations.”
But some Republicans are so insistent that this not be so, that when a report submitted by the Congressional Research Service found that raising taxes on the wealthiest citizens would not hurt the economy or stifle growth, as they have repeatedly claimed, they ordered the report to be withdrawn.
The report finds several historic instances of strong economic growth alongside high taxation, like the 1970s when the top rate was over 40 percent, compared to 35 percent todayor most of the past 65 years, historical tax rates were considerably higher than they are today,
The report concludes, “The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. 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.”
The report goes on to say that the only meaningful impact of raising tax rates on the wealthiest few, would be that of changing the way that wealth is distributed, which, given the historic levels of financial inequality in this country, is exactly what the economy needs, since putting more money into the hands of the middle class would powerfully boost the economy for all.
This move to suppress the report had certain lawmakers understandably upset, including Sen. Charles Schumer (D-NY) who said, “This has hues of a banana republic. They didn’t like a report, and instead of rebutting it, they had them take it down.”
Republicans said that they objected to both the tone of the report and its findings. A spokesman for the Senate minority leader, Mitch McConnell (R-KY), said McConnell and others had “raised concerns about the methodology and other flaws.”
The study however, contains nothing at all controversial. It simply presents the data, by year, showing the top tax rates and their relationship to: saving and investment, productivity, and GDP growth. There was no correlation. The only thing that the report said could be impacted by adjusting tax rates, based on historical data, was “how the economic pie is sliced.”
Let’s hope that the folks in Washington are now ready to move past the divisiveness of the electoral season, take a step back from ideology and take a look at history to see what can be learned about solving the real problems this country faces today.
RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.
Follow RP Siegel on Twitter.