12 November 2009


Seems clear that economic growth in the U.S. was highest, prosperity more widespread, and the middle class more secure when the top marginal tax rate was at its highest (up to 92%) during the post-war period, 1946-1963. After Reagan slashed the marginal rate in 1982 (from 69 to 50%), deficits ballooned, the recession deepened, and (I believe) the middle class began a long retreat which has continued to the present.

Whether a greater number of payers ACTUALLY pay at the highest rate today (not whether they are simply eligible to pay at that rate) would be instructive to know. I really need to hire my own bevy of tax advisors!

True, there is lack of a definite correlation between tax rates and the health of the economy. But, let me add one more: The recent Bush tax cuts (in 2000?) and the subsequent severe, near fatal, economic downturn of last year (2008).

Yes, there are complicating factors (the messiness of economics not having
laboratory conditions), such as "natural" economic cycles, monetary policies (Bush spending mushroomed, particularly war spending), and the fact of the tendency (in the system we have) toward economic bubbles.

I wonder whether the system is now more conducive toward bubble creation. I also wonder whether a higher (possibly much higher) marginal tax rate would mitigate against the "bubbling."

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