Wednesday, January 14, 2009

Tax Hikes Are Patriotic, Richie Rich

Larry Beinhart has written so many interesting things, but his recent
Time For Tax Hikes really hits the nail on the head in timely fashion.

"U.S. economic growth has been strongest when our taxes have been high. During World War II, then under Truman, Eisenhower, and Kennedy, our upper marginal tax rates were between 88%-92%. Read those numbers again. They are astonishingly high. Those were our strongest growth years.

I never expected to say this. Pelosi's right, Obama's wrong.

Do keep in mind that we are talking about higher taxes on the richest members of society, the very richest. So unless you're among that elite group, don't panic for personal reasons. Keep in mind, also, that we are speaking only of income taxes.

You have certainly heard, several thousand times, that tax cuts lead to economic growth. That's not true. Moderate tax cuts lead to a flat economy. (The Johnson tax cuts, usually misnamed the Kennedy tax cuts, lead to 16 years of virtually no growth.)

Large tax cuts are followed by a boom in the financial sector, a bubble, and a crash. Then a recession or depression with massive bank failures. This has happened three times, in the 1920s, under Reagan, and under George W. Bush.

During a depression or recession, the point where taxes are increased marks the point when the economy begins its recovery: 1932 under Hoover, Roosevelt's second round of tax hikes in 1940, the first president Bush's tax hike, followed by the Clinton tax hike. (The one exception: Roosevelt's tax hike of 1936, which was accompanied by cuts in government spending.)

The next time we experienced strong growth -- not just in the fiscal sector, across the entire economy -- was after the Clinton tax hikes. Why do tax hikes lead to strong economic growth?"

I know y'alls miss Actor212's giant...brain re the economics and such.
In lieu of that, to keep the DT's from setting in, read the rest of Larry's article.