which is why 401ks, IRAs and other “tax deferred savings” are a suckers bet. You defer income that would normally be taxed at the lowest levels in history, and pay the tax on withdrawal on income that will be the highest. Folks would have done far better without the “benefits” of tax deferral, since capital gains taxes were also at historic lows. They are still likely to do better removing their monies before the Chosen One manifests.
Not only did taxes soar on the wealthiest, but even the poorest saw their taxes rise ten fold. This is how many farmers and others who never speculated, and who owned their farms free and clear, ended up losing their property, through taxation.
Total government purchases of goods and services expanded virtually every year, with federal expansion especially marked in 1933 and 1934. [But] the federal Revenue Act of 1932 virtually doubled full employment tax yields…
…the highly deflationary impact of this tax law has not been fully appreciated…The Revenue Act of 1932 pushed up rates virtually across the board, but notably on the lower and middle income groups….Personal income tax exemptions were slashed, the normal-tax as well as surtax rates were sharply raised, and the earned-income credit equal to 25 percent of taxes on low income was repealed. Less drastic changes were made in the corporate income tax, but its rate was raised slightly and a $3000 exemption eliminated. Estates tax rates were pushed up, exemptions sharply reduced, and a gift tax was provided. Congress toyed with a manufacturers’ sales tax, but finally rejected it in favor of a broad new list of excise taxes and substantially higher rates for old ones….
The Revenue Act of 1932 was followed by many further tax increases (e.g. Brown notes “…social security taxes began in 1937 to exert a pronounced effect…”) many of them, under pressure from the Huey Long wing, designed to “Share our Wealth.”
“Share our Wealth”. Where have I heard that one recently.
Many economists believe that FDR’s policies prolonged the depression and the suffering that it entailed. It was the second world war that actually got us out of the hole – and also destroyed and/or bankrupted our competitors. Why work for 20 cents on the dollar. It was JFK (to 70%) and then Reagan (to 50% and later 36%) who lowered the top rates – and tax revenue increased both times. Look at post-war Britain – a socialist government came in and food rationing continued until the 1950’s – I think the defeated were eating better long before them. Money is not terribly patriotic – squeeze to hard and it will leave.
Chips, I’m sure many economists think that: but the strongest studies indicate that a lower tax rate with intensive public spending is what worked: it was the war which got us out of the great depression. If anything, it was that FDR was too cautious. In the end, deficits are the way to go.
Of course Reagan and Bush were good at that.
Tax cuts are sometimes helpful. Sometimes taxes are helpful. It depends on what they are used for. For people making more than half a million a year, at what point do people work for greed, or love?
The Depression ended when government stopped pouring productive young men into the maw of the warfare state and capital was reallocated to the private sector, over Harry Truman’s objection.
94%?!
That makes even this liberal cringe.
which is why 401ks, IRAs and other “tax deferred savings” are a suckers bet. You defer income that would normally be taxed at the lowest levels in history, and pay the tax on withdrawal on income that will be the highest. Folks would have done far better without the “benefits” of tax deferral, since capital gains taxes were also at historic lows. They are still likely to do better removing their monies before the Chosen One manifests.
Not only did taxes soar on the wealthiest, but even the poorest saw their taxes rise ten fold. This is how many farmers and others who never speculated, and who owned their farms free and clear, ended up losing their property, through taxation.
http://1.bp.blogspot.com/_otfwl2zc6Qc/SRdLPmrZx3I/AAAAAAAAHqk/a9xCi3vmfds/s1600-h/taxlow.bmp
From “Marginal Revolution”
http://www.marginalrevolution.com/marginalrevolution/2008/11/understanding-f.html
Total government purchases of goods and services expanded virtually every year, with federal expansion especially marked in 1933 and 1934. [But] the federal Revenue Act of 1932 virtually doubled full employment tax yields…
…the highly deflationary impact of this tax law has not been fully appreciated…The Revenue Act of 1932 pushed up rates virtually across the board, but notably on the lower and middle income groups….Personal income tax exemptions were slashed, the normal-tax as well as surtax rates were sharply raised, and the earned-income credit equal to 25 percent of taxes on low income was repealed. Less drastic changes were made in the corporate income tax, but its rate was raised slightly and a $3000 exemption eliminated. Estates tax rates were pushed up, exemptions sharply reduced, and a gift tax was provided. Congress toyed with a manufacturers’ sales tax, but finally rejected it in favor of a broad new list of excise taxes and substantially higher rates for old ones….
The Revenue Act of 1932 was followed by many further tax increases (e.g. Brown notes “…social security taxes began in 1937 to exert a pronounced effect…”) many of them, under pressure from the Huey Long wing, designed to “Share our Wealth.”
“Share our Wealth”. Where have I heard that one recently.
And Paul Krugman said that FDR didn’t go far enough.
Happy times ahead 🙁
Many economists believe that FDR’s policies prolonged the depression and the suffering that it entailed. It was the second world war that actually got us out of the hole – and also destroyed and/or bankrupted our competitors. Why work for 20 cents on the dollar. It was JFK (to 70%) and then Reagan (to 50% and later 36%) who lowered the top rates – and tax revenue increased both times. Look at post-war Britain – a socialist government came in and food rationing continued until the 1950’s – I think the defeated were eating better long before them. Money is not terribly patriotic – squeeze to hard and it will leave.
Chips, I’m sure many economists think that: but the strongest studies indicate that a lower tax rate with intensive public spending is what worked: it was the war which got us out of the great depression. If anything, it was that FDR was too cautious. In the end, deficits are the way to go.
Of course Reagan and Bush were good at that.
Tax cuts are sometimes helpful. Sometimes taxes are helpful. It depends on what they are used for. For people making more than half a million a year, at what point do people work for greed, or love?
[i]In the end, deficits are the way to go.[/i]
Bang up job so far, George Bush.
The Depression ended when government stopped pouring productive young men into the maw of the warfare state and capital was reallocated to the private sector, over Harry Truman’s objection.