Friday, October 23, 2009

Hoover & Roosevelt Tax Increases Prolonged Depression

Let's make permanent the Bush tax cuts. Let's learn from history. President Obama increasing spending and taxes is not the way to get private employers to create jobs and hire employees.

See September 22, 2009 op/ed piece by Taxes, Depression, and Our Current Troubles by Dr. Arthur B. Laffer at

The sub headline is "Tariffs, rising state and federal taxes, and currency devaluation ruined the 1930s, and they could do the same today."

■ "The damage caused by high taxation during the Great Depression is the real lesson we should learn."
■ "The Smoot-Hawley tariff of June 1930 was the catalyst that got the whole process going. It was the largest single increase in taxes on trade during peacetime and precipitated massive retaliation by foreign governments on U.S. products."
■ "Huge federal and state tax increases in 1932 followed the initial decline in the economy thus doubling down on the impact of Smoot-Hawley."
■ "There were additional large tax increases in 1936 and 1937 that were the proximate cause of the economy's relapse in 1937."
■ "beginning in 1932 the lowest personal income tax rate was raised [under Hoover] to 4% from less than one-half of 1% while the highest rate was raised to 63% from 25%."
■ Under Hoover "The corporate rate was raised to 13.75% from 12%. All sorts of Federal excise taxes too numerous to list were raised as well. The highest inheritance tax rate was also raised in 1932 to 45% from 20% and the gift tax was reinstituted with the highest rate set at 33.5%."
■ "In 1934, during the Roosevelt administration, the highest estate tax rate was raised to 60% from 45% and raised again to 70% in 1935. The highest gift tax rate was raised to 45% in 1934 from 33.5% in 1933 and raised again to 52.5% in 1935. The highest corporate tax rate was raised to 15% in 1936 with a surtax on undistributed profits up to 27%."
■ "In 1936 the highest personal income tax rate was raised yet again to 79% from 63%"
■ "in 1937 a 1% employer and a 1% employee tax was placed on all wages up to $3,000."
■ "In 1929, state and local taxes were 7.2% of GDP and then rose to 8.5%, 9.7% and 12.3% for the years 1930, '31 and '32 respectively."
■ "the Bush tax cuts are set to expire in 2011; and additional taxes to pay for health-care and the proposed cap-and-trade scheme are on the horizon."

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