And in the end, Ryan’s answer is that we need strong economic growth, the kind that we get by cutting taxes on the rich. Because that’s why the Clinton years were an economic disaster and the Bush years so prosperous.
Is this strong evidence?
First of all, we need to consider a number of causal hypotheses:
1) Tax rates on the rich are unrelated to economic growth
2) Higher tax rates on the rich increase economic growth
3) Economic growth makes it easier to tax the rich
4) Higher tax rates on the rich decrease economic growth
Then we need to consider lags between tax policy and changes in economic growth. I am suspicious of anyone who says that this is an easy problem. After all, what we really want (the counterfactual of what would happen if Bush/Clinton not changed tax policy) is completely unavailable.
So what value is this evidence?
It does rule out one very clear talking point in the debate. It suggests that moderate changes in tax policy (Bush Tax cuts) do not have a stronger effect on economic growth than the economic fundamentals do. We may even take this as weak evidence of hypothesis #4 above (with all of the caveats about not being able to make a strong inference).
So the ideas that tax cuts [focused on high income earners] are a good response to short term problems with weak economic growth seems to be contrary to the best evidence available. Nor does looking at period like the 1950' (with very high marginal rates and rapid growth) seem to provide a lot of support for Hypothesis #2.
But if it is case that Hypothesis #2 is true, we know that it is unlikely to overcome other economic issues (or it would have made the Bush years a time of prosperity). Or, in other words, that the overall effect size of this tax policy change is small relative to other factors (if it works in the direction predicted by Hypothesis #2). Now one can reframe this as a moral question, and some do.
But it is worth considering that, in the absence of controlled experiments, how do we update our expectations when a strategy that sounds reasonable doesn't seem to give expected results.