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November 03, 2012

Senate Republicans Quash Findings on Wealth Inequality
    by Robert Kropp

After the Congressional Research Service issues a report finding no correlation between economic growth and lower tax rates for the wealthiest, Senate Republicans force its withdrawal to protect the party orthodoxy on taxes.

SocialFunds.com -- Sustainable investors, whose corporate and regulatory engagement strategies regularly address the issue of the nation's increasing wealth inequality, are not likely to be surprised by the findings of a report from the nonpartisan Congressional Research Service, authored by Public Finance Specialist Thomas Hungerford and originally released in September.

The report, which "attempts to clarify whether or not there is an association between the tax rates of the highest income taxpayers and economic growth…seeks to establish what, if any, relationship exists between the top tax rates and economic growth." The findings are of especial interest in this election year, as Republican candidate Mitt Romney supports an economic policy that calls for tax cuts for the rich.

In 1945, the average tax rate for the highest-income taxpayers was 94%. Since 2001, it has stood at 35%, and candidate Romney wants to decrease it to the Reagan-era level of 28%. Have such tax cuts for the rich, through investment and business development, actually contributed to economic growth? The answer, according to the report, is no: "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," it states.

Yet the really newsworthy aspect of the report is not its findings, which are unlikely to surprise anyone with the eyes to see a persistent economic recession occurring at the same time as a growing concentration of wealth in the hands of the few.
The New York Times reported this week that Senate Republicans, alleging concerns over the report's "findings and wording," pressured the Congressional Research Service into withdrawing it.

"The pressure applied to the research service comes amid a broader Republican effort to raise questions about research and statistics that were once trusted as nonpartisan and apolitical," The Times wrote.

Objecting to the report being "taken down in response to political pressure from Congressional Republicans who had ideological objections to the report's factual findings and conclusion," Senator Sander Levin of Michigan demanded that Mary Mazanec, the director of the Congressional Research Service, explain why it was done.

Stating that "the report's findings undermine a central tenet of Republican party orthodoxy on taxes," the Democratic Policy & Communications Center published the study on its
website.

And Hungerford, the report's author,
told the Huffington Post, "People who specifically look at the writing and the tone said it was okay. So it's not going to be that and as I can tell you outright, I stand by the report and the analysis in the report."

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