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We cut taxes and government spending by 40 percent over a two year period starting from 1920. Unemployment went from 12 percent to under 4.
You were saying?
First, where did you get you unemployment figures, because there were no official figures back then?
According to wiki, two different economists estimate as follows:
Instead of unemployment going from 12% to 4%, unemployment soared, from 1.4% - 11.7% or 3% - 8.7%, depending upon the economist's estimate.
Second, according to the NBER, the 1920 recession started in January 1920 and ended in July 1921. The tax-cuts you mentioned didn't happen until 1922 (for upper-brackets) and 1923 (for lower brackets.) Those tax-cuts were after the recession already ended. You are misrepresenting cause and effect. How could the tax cuts be responsible for ending the recession when the cuts happened after the recession ended?
Third, let's look at government spending:
You claim that cutting government spending helped unemployment. I already showed that your basic facts were false but let's see the spending picture anyway. According to Government Spending Details: Federal State Local for 1919 - Charts the following was the federal spending in the marked years:
As one can see, World War I was over and government spending dropped from $18.9 bil. to $6.6 bil. from 1919 to 1920. That's what caused the recession and high unemployment. But it sure doesn't show that cutting government spending improved the economy; it shows the exact opposite. Yet, the Harding Admin. continued to cut spending and taxes. If your theory, namely, tax-cuts and government spending cuts are good, then why did another recession occur within three years? If your theory was correct, there should have been a long run of prosperity. But what we find is that from the end of the 1920 recession until the start of the Great Depression, a third of the time were recessionary -- and usually followed tax-cuts. That's hardly a ringing endorsement of their policies.
If anything, a revue of this period supports the Keynesian models -- cutting spending hurt jobs and the economy.
Let's say we are going to build a $37 million dollar facility.
That means that we will have to have made roughly $52 million'ish to do that.
At current rates, 15%, we would only need slightly above $43 million'ish.
You see how that would hamper growth?
Yes I do see how that would hamper growth. That is the nature of taxes.
Your story could also apply to someone without any investments, trying to save up start a business by working a job, and is paying high rates of payroll / income taxes. Wage taxes are impairing his/her ability to save excess capital, with which to invest and create jobs.
The fact is , you're just talking about the earnings of richer folks vs. poorer folks. Us Po' Folk who earn wages for a living are just as likely to invest and create jobs as someone who made their money off the growth in their existing assets.
It's all built sort of an insulting, horse-sh*t premise to begin with, to suggest that some rich guy knows how to better invest his capital gains income, than I know how to invest my wage income.
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You do expect us to get a ROI, right? You do understand building that facility (or property or whatever else) will employ lots of people and operating it will require lots of contractors, right?
Now a 0% capital gains tax rate would mean we would only need dollar for dollar to continue our growth and continue to build more and more facilities and employ more and more contractors and employees.
Sure, a 0% capital gains tax would mean that the folks who already have capital would be able to build their facility more quickly.
However, it comes at the expense of the folks who have no capital, who may be trying to build something too, and are being forced to shoulder the tax burden instead. It works directly (as a tax), and also indirectly as an economic distortion (this capital gains tax preference draws more capital into assets, making them more expensive.)
In other words, it impairs income mobility by favoring the people who already have assets.
Last edited by Cletus Awreetus-Awrightus; 11-21-2011 at 05:48 AM..
The hypocracy of you guys on the left is astounding... Let me see if I get this straight
You think the Bush tax cuts raised the deficits, even though it increased revenues, but you think cutting the payroll tax doesnt increase the national debt?
Tell me how a reduction in payroll taxes encourage economic growth and why you support that one, but not cutting income taxes?
Oh, and try not to respond with "Democrats proposed it so its good, GOP proposal = bad"..
I'm well experience and qualified. I don't like to get personal here so I'll leave it out.
As others have pointed out, you're wrong so I'm not going to waste my breath here.
Let's get back on topic about capital gains tax.
Luckily for me, my tax liabiltiies arent open to "public polls".. Just because others dont know crap about the american tax code system, doesnt mean those who do, are wrong.
Bush tax cuts didn't increase tax revenues. Increased tax revenues over that period were due to lending $1.5 trillion / year in mortgages to anyone rumored to have a pulse.
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but you think cutting the payroll tax doesnt increase the national debt?
No, I didn't say that. I just think the Bush tax cuts make the tax system less equitable, and the payroll tax cuts make the tax system more equitable.
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Tell me how a reduction in payroll taxes encourage economic growth and why you support that one, but not cutting income taxes?
Bush tax cuts included capital gains cuts. Payroll tax cuts did not.
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