We hear all the time about how low taxes on capital leads to growth
and yet, there’s virtually no evidence.
University of Michigan tax economist Joel Slemrod, another of the nation’s leading tax policy experts, has found that “there is no evidence that links aggregate economic performance to capital gains tax rates.” Similarly, [Tax Policy Center] has found no statistically significant correlation between capital gains rates and real GDP growth during the last 50 years. In addition, a new CRS report analyzing capital gains tax rates and economic growth finds that “analysis of such data suggests the reduction in the top [capital gains] tax rates have had little association with saving, investment, or productivity growth”.
As an alternative, Bernstein proposes some ideas that evidence actually exists for, rather than prejudice and discredited theory:
I don't have time to comment much, but I do think the framing of tax reform is one of the clearer pieces of evidence of how the elite dominate the discourse and manipulate our institutions to their own benefit, rather than the benefit of the nation as a whole. It's common wisdom that "pro-growth" policies mean low taxes on "job-creators," business, and capital; yet there's little evidence to support these policies. It's common wisdom for the sole reason that a rich man in a suit said it, which isn't wisdom at all.
Instead of starting from what are basically discredited supply-side arguments—the fiscal version of drink-our-beer-and-prepare-for-the-arrival-of-the-hotties—tax reform should focus on what really drives economic growth these days: globalization, including currency and trade imbalances, technology, skill demands, connectivity, industry mix, capital markets and how those national and international phenomena interact our workforce, public goods/infrastructure, our airports, financial markets, technology, ports, and so on. Simply cutting taxes on the wealthy or the multinationals doesn’t begin to scratch any of these critical economic itches.