OpEdNews - Page 2 of Article: TAX CUTS: THEOLOGY, FACTS & TOTALLY F**KED

2. REAGAN
From Franklin Roosevelt's second term all the way through to Jimmy Carter, - from 1936 until 1982 - the top rate was in the 70-92% range.
Then along came Reagan in 1981. In 1982 he cut that down to 50%.
The economy went into "the worst recession since the Great Depression."
His supporters argued that it was all Carter's fault and that the new policies would take time to work. The tax cuts stayed in place. In 1987, there was another round of tax cuts. They took the top rate down to 38.5%. It would stimulate the economy!
There was a boom. But it was a bubble.
Then, in October, 1987, there was a crash. The worst since '29. It was called Black Monday.
Much of the bubble money had gone into – ohmigod! –real estate.

Suddenly there were bank failures! More than during the Great Depression. There was a Savings & Loans crisis! There had to be a bailout.

3. BUSH II
George Bush came into office with the healthiest, post powerful economy in American history.
He immediately cut taxes. The top marginal rate went down from 39% to 35%. He also cut capital gains taxes and inheritance taxes. A recession immediately ensued. But he persisted.
Eventually, the economy began to grow.
Employment didn't grow very much. Median income went down. The stock market was pretty flat. But the financial sector – and only the sector – grew.

Which should have made it obvious to someone, that it was ... a bubble.
There was a crash.
Bank failures. A bailout.

The three worst economic disasters in American history follow the exact, same pattern. Tax cuts, boom, bubble, crash.

HIGH TAXES CORRELATE WITH ECONOMIC GROWTH

The four period of greatest economic growth in American history, by pretty much any measure, are:
· World War II (1941-45): top tax rate varied from 88-94%

· Post-war under Truman and Eisenhower: top rate bounced around from 81-92%

· Clinton years: Clinton raised Bush's top rate of 31% to 37% and then to 39%

· First two Roosevelt Administrations (1933-40). When Roosevelt came into office, Hoover had already raised the tax rate in 1932 from 25% to 63%. Roosevelt raised it again in 1936 to 79%.

A lot of ink, sweat, and ranting has gone into proving that the New Deal did not end the Great Depression. Nonetheless, the economy grew 58% from the time Roosevelt came into office and when the US entered the war.

Some of that anti-New Deal rhetoric also claims that the recovery began under Hoover. Perhaps, but to say so, is also to say that it began with tax hikes.

Likewise, many right wing critics insist that the Clinton boom actually started under Bush the First. It is necessary to remember that Bush the First also raised taxes (from 28% to 31%) and was soundly thrashed by the conservative for doing so. Stephen Moore, of the Cato Institute, called it "The Crime of the Century," and explained, at length how it had brought ruin to America.

TAX INCREASES ARE FOLLOWED BY ECONOMIC GROWTH

Three of the four high growth periods cited above followed significant tax hikes.
The fourth, the Truman-Eisenhower years, began with a top tax rate of top rate of 91% and it couldn't get much higher.

MODERATE TAX CUTS ARE FOLLOWED BY A FLAT ECONOMY

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