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A history of taxes

Posted by on Nov. 24, 2012 at 11:39 AM
  • 6 Replies

Here are some interesting FACTS about the US and tax rates.  

Thanks to the Tax Foundation  and other sources, we've analyzed tax rates over the past century, along with government revenue and spending over the same period.

This analysis revealed a lot of surprising conclusions, including the following:

  • Today's government spending levels are indeed too high, at least relative to the average level of tax revenue the government has generated over the past 60 years. Unless Americans are willing to radically increase the amount of taxes they pay relative to GDP, government spending must be cut.
  • Today's income tax rates are strikingly low relative to the rates of the past century, especially for rich people.  For most of the century, including some boom times, top-bracket income tax rates were much higher than they are today.
  • Contrary to what Republicans would have you believe, super-high tax rates on rich people do not appear to hurt the economy or make people lazy: During the 1950s and early 1960s, the top bracket income tax rate was over 90%--and the economy, middle-class, and stock market boomed.
  • Super-low tax rates on rich people also appear to be correlated with unsustainable sugar highs in the economy--brief, enjoyable booms followed by protracted busts. They also appear to be correlated with very high inequality. (For example, see the 1920s and now).
  • Periods of very low tax rates have been followed by periods with very high tax rates, and vice versa. So history suggests that tax rates will soon start going up.



Read more: http://www.businessinsider.com/history-of-tax-rates?op=1#ixzz2D9s6fcAn

More information here:  http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2011-nominal-and-inflation-adjusted-brackets

And before you protest that INCOME taxes may be low, but the government is now gouging us a thousand new ways, note that total government tax revenue (federal, state, and local) is actually now lower than pretty much any time in the last 40 years. (Not as low as it was in the first half of the last century, though!

And here's another look at federal spending as a percent of GDP for the past century. It's not way out of whack these days, at least relative to the last 60 years. But, thanks to the stimulus, it's higher than it has been since World War 2. (And the Republicans are probably right--it's too high).

And here's another look at federal spending as a percent of GDP for the past century. It's not way out of whack these days, at least relative to the last 60 years. But, thanks to the stimulus, it's higher than it has been since World War 2. (And the Republicans are probably right--it's too high).



-1925--the tax cuts continued. The top rate was slashed to 25%, down from 73% just two years earlier. The highest wage earners--those who made $100,000 and up--got to keep a vastly larger share of their income than they had only a few years previously.  And what happened to the economy? For a few years, from 1925-1929, the economy and stock market boomed. The decade became known as the "roaring 20s." Inequality--the difference in wealth between the top earners and everyone else--also soared to unprecedented levels. Then the bottom fell out.

By 1932, with the country's economy in a shambles, the tax code changed again. The high rates on top earners were reintroduced. Now, anyone who made over $100,000 was in a 56% bracket (versus 25% in the late 20s). And those earning over $1 million paid 63%.

And taxes stayed pretty much just that way for the next 15 years, until the early 1960s. Importantly, this was one of the most successful eras in US economic history. The middle class boomed, the economy boomed, and the stock market boomed. And all with the top marginal income tax rate over 90%. This suggests that the Republican mantra about high marginal tax rates killing the economy is, well, a bunch of crap.



The moral of the story here is this, if you want to get out of the recession you are going to have to raise taxes.  You can look at our tax history and plainly see this.

by on Nov. 24, 2012 at 11:39 AM
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Replies (1-6):
blues_pagan
by on Nov. 24, 2012 at 3:06 PM

bump!

emeraldangel2.0
by on Nov. 24, 2012 at 3:14 PM

truth

_Kissy_
by on Nov. 24, 2012 at 3:19 PM

TFS

Canvas_says
by Silver Member on Nov. 24, 2012 at 7:14 PM
1 mom liked this

Yes, raise taxes across the board and cut spending by a lot to start to work down the deficit. Doesn't matter how high we raise taxes when we bleed money out at every possible chance of creating a new government position. 

susan115
by on Nov. 24, 2012 at 7:30 PM
2 moms liked this

I mean not disrepect, but you are only doing one side of the puzzle, it depends on why you are taxing that makes a difference.  Raising taxes are not the only answer.  You must balance the checkbook the best you can.

Do you give your everything, or do they earn it?  Taxes are meant to build something like a road, a school, a bridge, etc...NOT free stuff or welfare so you can stay home.  Why should I pay more?  Because I make more?  When I make something that others what and I take a huge profit, why should I pay more?  Especially, if I worked very long, long hours for my reward.  Now, let's talk about paying walmart workers more money, but this is really what this is about.  You feel the rich are getting away taking more, are you sure that is true?  What about the otherside?  Do you understand that walmart workers are responsible for their own life and career choices.  I am not criticizing, because I worked for VERY low wages while trying to put myself through school.  I made a choice and many days I looked horrible.  Now, you think you should tax me more?  You really need to understand history, which you don't, Ms. blue-pagan.  Higher taxes are not the answer.  Now, go read.

29again
by Gold Member on Nov. 24, 2012 at 7:41 PM

The first thing mentioned in the list in the OP was that spending is way too high.  And then that aspect was ignored for the rest of the article.  I think that we (as a country) need to try to live within our means, which means we don't spend more than we bring in.  Yeah, that means lots of programs will be cut (sorry, Big Bird..  and NPR.. and PP.. and the college grad students who want to find a correlation between a drug and prostitution or between alcohol and drugs)  but we have to do that.  We cannot keep borrowing from China to fund SS and FS.  We cannot continue with $trillion + deficits every year.  I will not and cannot support higher taxes UNTIL we make some major cuts in our spending so that we are only paying for what is necessary.  If we still can't make it then, then we raise taxes.

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