As the nation teetered on the edge of the so-called "fiscal cliff" in late 2012, Republican leaders warned that higher taxes for the rich would crush "job creators" and derail the U.S. economic recovery. But according to a new survey, a majority of those earning over $500,000 a year report that the new higher rates on income and capital gains have not impacted their spending, charitable giving or investment strategies. As it turns out, the Chicken Little conservatives could have spared themselves this embarrassment had they just heeded the lessons of American history and the predictions of the Congressional Budget Office.

Last fall, the nonpartisan CBO forecast the impact of "going over the fiscal cliff." As the chart above shows, CBO warned that the combination of the expiring Bush tax cuts for all Americans, the end of the temporary payroll tax holiday and the steep budget cuts of the sequester could catapult unemployment to 9.1 percent while slashing gross domestic product by 2.9 percent in 2013. But ending the Bush tax cuts for households earning over $250,000 a year, the agency assured lawmakers, would have virtually no impact (the 0.1 percent of GDP in light blue above) on the U.S. economy at all.

As CNBC reported last Wednesday, the CBO appears to have had it exactly right--at least so far. The GOP's dire predictions that upper-income Americans would "would spend less, invest less and give less to charity" have not come to pass:

The Shullman Luxury and Affluence Monthly Pulse found that 55 percent of people making $500,000 or more said higher taxes have not impacted their spending plans. Fully 61 percent of those making $250,000 or more said taxes have not impacted their spending plans.

On investing, 59 percent of those making $500,000 or more (and 64 percent of the $250,000-plus group) said higher taxes have not impacted their investment strategies. When it comes to charity, 55 percent of those making $500,000 or more, and 62 percent of those making $250,00 or more, said paying more taxes has not impacted their giving plans.

Of course, it's still early in the year. It's possible some of the well-to-do (that is, households earning over $450,000 a year) have not yet adjusted to the fiscal cliff deal that raised their income tax rate to 39.6 percent (from 35) and capital gains and dividend tax rate to 20 percent (from 15) in addition to the surcharges from the Affordable Care Act.

Possible, but unlikely. As the decades of U.S. history show, the American economy grew faster and produced more jobs when upper-class tax rates were higher--even much higher--than today. And as the data also show, lower capitals gains tax rates don't fuel greater investment, but instead greater income inequality.

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Last month, an analysis by Berkeley Professor Emmanuel Saez revealed that the top 1 percent of American earners captured all the income gains during the first two years of the current economic recovery while the other 99 percent lost ground. Now, a new analysis by Congressional Research Service analyst Thomas Hungerford is just the latest to show that historically low capital gains tax rates are "by far the largest contributor" to America's historically high income inequality.

As ThinkProgress explained Hungerford's findings, the upward spiral of income inequality (as measured by the Gini coefficient) between 1991 and 2006 is mostly due to federal tax policy that slashed rates on capital gains and dividend income, income which flows almost exclusively to the rich:

By far, the largest contributor to this increase was changes in income from capital gains and dividends. Changes in wages had an equalizing effect over this period as did changes in taxes. Most of the equalizing effect of taxes took place after the 1993 tax hike; most of the equalizing effect, however, was reversed after the 2001 and 2003 Bush-era tax cuts. [...]

The large increase in the contribution of capital gains and dividends to the Gini coefficient, however, is due to the large increase in the share of after-tax income from capital gains and dividends, and to the increase in the correlation of this income source with after-tax income.

Hungerford's table below provides a window into the rapid upward income redistribution underway over the last two decades. Between 1991 and 2006, the share of Americans' total income coming from wages and salaries dropped from 92 to 77 percent. During the same period, capital gains income almost tripled, catapulting from 5.4 to 15.6 percent. Unsurprisingly, "capital gains and dividends share appears to be pro-cyclical, increasing during the expansions and falling during recessions." (That is reflected in Saez' findings, which showed that the dramatic increase in stock prices from 2009 to 2011 drove much the winner-take-all payday to the top sliver of U.S. households.)

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Among the things largely absent from the 2012 Republican National Convention has been any mention of Bain Capital and any fidelity to the truth. After the first two days, the GOP's twin frauds about welfare and "we built that" were once again demolished, prompting Team Romney to protest that "we're not going to let our campaign be dictated by fact checkers." Adding to the embarrassment was a prime-time presentation on how to build your small business by selling to the government.

As it turns out, the silence about Mitt Romney's old company (which only ended on the ceonvention's last night) and the Republican sham that "you didn't build it" are related. Because when it comes to Bain Capital, in a very real sense you did build it. After all, your United States tax code doesn't merely allow the "carried interest exemption" that enables the likes of Mitt Romney to pay a lower rate than many middle class families. Without the public subsidy that is the corporate debt interest deduction, there might not be a Bain Capital--or a private equity industry as we know it--at all.

As the history shows, on his road to becoming a $250 million captain of private equity at Bain Capital, Mitt Romney had a lot of help from his uncle. Uncle Sam, that is. Writing in Rolling Stone, Matt Taibbi explained how:

Essentially, Romney got rich in a business that couldn't exist without a perverse tax break, and he got to keep double his earnings because of another loophole - a pair of bureaucratic accidents that have not only teamed up to threaten us with a Mitt Romney presidency but that make future Romneys far more likely. "Those two tax rules distort the economics of private equity investments, making them much more lucrative than they should be," says Rebecca Wilkins, senior counsel at the Center for Tax Justice. "So we get more of that activity than the market would support on its own."

Then-Bain Capital CEO Mitt Romney concluded as much when he acknowledged, "There's a lot greater risk in a startup than there is in acquiring an existing company." So he fatefully redirected his firm from venture investments in new companies like Staples and instead became a leveraged buyout king. To understand both why he did that and how all American taxpayers helped make it possible, a little background is in order.

Private equity owes its success in no small part to that uniquely American provision of the corporate tax code. The New York Times recently helped explain why:

Companies can finance investment from either debt or equity. Companies can finance investment from either debt or equity. But profit on an investment financed with equity -- stock issued by the company -- is taxed. In contrast, if the project is financed with debt, then only the profit after interest payments are made is taxed. This means debt-financed investments are cheaper than equity.

And not just a little cheaper. As the Treasury Department recently explained, "The effective corporate marginal tax rate on new equity-financed investment in equipment is 37 percent in the United States. At the same time, the effective marginal tax rate on the same investment made with debt financing is minus 60 percent--a gap of 97 percentage points." The result:

This creates a bias by corporations toward debt.

Or, for the likes of Mitt Romney, a business model.

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At events across the country, Mitt Romney's presidential campaign is trying to convince voters that small business owners in fact build the roads and bridges they use every day. Unfortunately, Romney's "We Did Build It" gatherings have hit some potholes, with many participants revealed to be the recipients of government contracts and subsidies and others unaware of the full context of President Obama's selectively edited remarks now under attack.

But Mitt Romney has another, much larger problem with his baseless contention that President Obama is "insulting to every entrepreneur, every innovator in America." Because on his road to becoming a $250 million captain of private equity at Bain Capital, Mitt Romney had a lot of help from his uncle. Uncle Sam, that is. As it turns out, the U.S. tax code doesn't merely allow Romney to pay a lower rate than many middle class families. Without the public subsidy that is the corporate debt interest deduction, there might not be a Bain Capital--or a private equity industry as we know it--at all.

Private equity owes its success in no small part to that uniquely American provision of the corporate tax code. The New York Times recently helped explain why:

Companies can finance investment from either debt or equity. Companies can finance investment from either debt or equity. But profit on an investment financed with equity -- stock issued by the company -- is taxed. In contrast, if the project is financed with debt, then only the profit after interest payments are made is taxed. This means debt-financed investments are cheaper than equity.

And not just a little cheaper. As the Treasury Department recently explained, "The effective corporate marginal tax rate on new equity-financed investment in equipment is 37 percent in the United States. At the same time, the effective marginal tax rate on the same investment made with debt financing is minus 60 percent--a gap of 97 percentage points." The result:

This creates a bias by corporations toward debt.

Or, for the likes of Mitt Romney, a business model.

For the leveraged buyout (LBO) kings of the 1970's and 1980's, that was the pot of the gold at the end of the rainbow. Because the same interest deduction applied whether debt was taken on for a new factory or just to pay investors, Josh Kosman detailed in The Buyout of America, the early corporate raiders and their private equity successors could almost mint money as they bought firms for a fraction of the overall deal size:

Kohlberg saw a way to make debt far less onerous for the company being acquired. He would have the company treat its debt the way businesses handle capital expenditures--as operating expenses deduced from profits through the depreciation tax schedules, thereby greatly reducing taxes. With far less to pay the government, his companies could use the money that formerly went to Uncle Sam to retire these huge loans at an unusually fast rate. Bear's equity would rise with every dollar the companies paid back in debt, even if the value of the businesses only remained the same. The final step in the plan was to sell these companies, usually within four to six years.

In January, The Economist explained how the perverse incentives work:

From 2004 to 2011 private-equity firms piled more debt onto their companies so they could take out $188 billion in dividends to pay themselves. The deals got bigger and bigger. The largest ever, in 2007, was the $44 billion purchase of TXU, an electricity company. The market worries the company will go under.

But though the private-equity people may have walked off with the loot, America's tax code was partly to blame, because it encourages this behaviour. The tax deductibility of interest payments on debt gives private-equity executives an incentive to pile extra debt onto the companies they buy, thereby risking the health of these firms for the sake of a tax benefit and the prospect of higher returns.

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Back in 2007, Republican White House hopeful Mitt Romney declared that taking a big payment from a company that later failed "would make me sick, sick at heart." If so, Romney by now must be badly in need of a quadruple by-pass. Because as the New York Times became just the latest to report, through massive consulting fees, sales of stock and, most perversely, dividend payments, Romney and his partners at Bain Capital reaped whirlwind profits even when the companies they acquired collapsed.

Back in January, McClatchy offered this primer on how private equity firms like Bain Capital work, at least on paper. As candidate Romney explained at a GOP debate back in June 2007, "Don't forget that when companies earn profit, that money is supposed to be reinvested in growth."

But as the New York Times documented Friday, large sums of that money were going to Mitt Romney and his Bain colleagues whether their portfolio companies were profitable or not. Put another way, Bain won either way:

Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain's funds.

Cambridge Industries, which filed for bankruptcy in 2000 after amassing $300 million in debt, is hardly unique when it came to Bain's "win even when they lose" business model:

Yet Bain Capital, the private equity firm that controlled the Michigan-based company, continued to religiously collect its $950,000-a-year "advisory fee" in quarterly installments, even to the very end, according to court documents.

In all, Bain garnered more than $10 million in fees from Cambridge over five years, including a $2.25 million payment just for buying the company, according to bankruptcy records and filings with the Securities and Exchange Commission. Meanwhile, Bain's investors saw their $16 million investment in Cambridge wiped out.

"Traditionally," Josh Kosman wrote in his 2009 book The Buyout of America, "cash-rich public companies have paid dividends to lure and reward investors." But private equity firms, he explained, stand this process on its head:

Fourteen of the largest American private equity firms had more than 40 percent of the North American companies they bought from 2002 until September 2006 pay them dividends. In thirty-two of the eighty-three case, 38 percent, they took money out in the first year.

Mitt Romney was a pioneer of this strategy. His private equity firm, Bain Capital, was the first large PE firm to make a serious portion of its money not from selling its companies or listing them on the stock exchange, but rather by collecting distributions and dividends, which in this context is the exact opposite of reinvesting in a company. Bain Capital is notorious for failing to plow profits back into its businesses.

Just how notorious was first detailed by the Times five years ago during Mitt Romney's first presidential bid:

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If nothing else, the 2012 Republican presidential contest has forced GOP White House hopefuls to run a gauntlet of ever more draconian pledges demanded by party purists. At the top of the list is the Grover Norquist's Taxpayer Protection Pledge, which demands candidates "solemnly bind themselves to oppose any and all tax increases."

But at a time of record high income inequality, historically low federal taxes and rising national debt their party is largely responsible for producing, the GOP presidential wannabes must take a two-part vow about their own tax-cutting proposals:

(a) If my tax cut plan is enacted, my family and I will save ________ in federal taxes every year.

((b) If my tax cut plan is enacted, it will add ________ trillion dollars to the national debt of the United States over the next decade.

Call it the "MyTaxCut Pledge."

The need for the MyTaxCut Pledge became glaringly apparent after the 2008 presidential campaign. Republican nominee John McCain offered a Treasury-draining tax cut plan that would have produced a massive windfall for him and his heiress wife, Cindy. As the Center for American Progress explained at the time:

McCain favors making the Bush tax laws permanent, and also plans to repeal the Alternative Minimum Tax, double the dependent exemption and offer tax breaks on business income...Had McCain's tax proposal been in place in 2006, [they] would have done incredibly well - saving even more than they did under the existing Bush plan. John and Cindy McCain would have walked away with $373,429 in their pocket.

McCain's tax plan was radically more regressive than even that of President Bush - it would have delivered 58% of its benefits to the wealthiest 1% of American taxpayers. But John and Cindy's winnings wouldn't have ended there. As both the financial crisis and his slump in the polls deepened, John McCain proposed slashing capital gains taxes (a halving from 15% to 7.5%). Again, the gains from his scheme go overwhelmingly to the richest Americans (almost 60% of its benefits to families earning over $1 million a year), including his wife:

The McCains made $746,395 in capitals gains last year. A new analysis by Michael Ettlinger, Vice President for Economic Policy at the Center for American Progress Action Fund, reveals that McCain's capital gains cut would have reduced the McCains' taxes by $55,980 in 2007.

But the McCain's proposed personal payday pales in comparison to the vault-stuffing espoused by his surrogate Meg Whitman. During her failed 2010 run for governor of California, the billionaire former eBay CEO proposed killing the state's capital gains tax altogether. As the Los Angeles Times' Michael Hiltzik noted, ending the capital gains tax would cost California up to $10 billion in revenue annually even as it would put tens of millions of dollars directly into Meg Whitman's pocketbook.

The Whitman campaign refused to tell me this week what percentage of Whitman's income derives from capital gains (which can be defined as profits on stock, bond, real estate and other such investments). Whitman has thus far refused to make public her tax returns, which might hold a clue...Capital gains might even represent the majority of her income in some years.

As Chris Kelly of the Huffington Post aptly put it, "Meg Whitman's Tax Plan: She Stops Paying Hers."

That recent history suggests that the 2012 GOP presidential field should come clean about what their respective tax plans will do for their own personal finances. After all, by any standard most are wealthy, with Mitt Romney, Jon Huntsman and Herman Cain especially so. (Romney's fortune has been estimated as high as $250 million dollars.)

Alas, the odds of any of the Republicans taking the MyTaxCut Pledge are virtually zero. After all, as Politico reported earlier this year:

A POLITICO survey of the major GOP hopefuls found that none are promising to making their tax returns public, as then-candidate Obama did in 2007 and 2008 -- as well as during his Senate campaign in 2004 and later in 2006.

But if the would-be Republican presidents won't fess up about the personal bonanzas their tax policies are certain to produce, at least they could come clean about what they'll do to the national debt.

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