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Which is more likely to create the incentive to invest in domestic job growth?
a) reducing the top income tax rate by 30 percentage points
or
b) increasing the top income tax rate by 30 percentage points
Before you answer, consider these facts:
In 1918, congress raised the top income tax rate to 77%. That led to a booming economy in the 1920s.
In 1925, congress cut the top income tax rate to 25%. That led to the Great Depression that started with a recession in 1929.
From 1929 to 1933, the unemployment rate nearly doubled every year despite the low top income tax rate of 25% (it was reduced to 24% for one year in 1929, then back to 25%).
In 1932 the top tax rate was increased to 63%, unemployment rate was 23%.
In 1936 the top tax rate was increased to 79%, unemployment rate was 17%.
In 1940 the top tax rate was increased to 81%, unemployment rate was 14%.
In 1942 the top tax rate was increased to 88%, unemployment rate was 4.7%
The only two periods in USA history that a severe recession occurred was a few years after the top income tax rate was cut.
Some of you obviously have no clue what is written into the tax code.
While the USA does have one of the highest corporate tax rates in the world, the tax code is filled with so many write offs that most corporations pay little to no taxes, so giving them another tax cut does nothing but increase the salary and bonuses of upper level management.
Yes, if you don't tax the rich heavily, they might invest in a new yacht, the might invest in overseas opportunities, they might invest in commodities and they might invest in the USA economy. With that approach, there is no guarantee as how they will spend their money.
Taxing them heavily forces them to either let the IRS take most of their income or invest enough of their income into the USA economy so that they will fall into a lower tax bracket.
"You could certainly increase taxes to 100% and theoretically unemployment would be 0% because then everyone would be an employee of the government."
^---That is about the most ignorant thing I have seen posted on Yahoo! Answers.
If you increase income taxes to 100%, the unemployment will also go to 100% because nobody is going to work for nothing.
Lets see if your ignorant logic works on the 'red herring' that republicans like to use to support their wish for lower taxes. The 'Lowering income taxes always increases revenue' red herring. So by lowering income taxes to 0% it will increase revenue by hundreds of trillions of dollars per year. That's right, your ignorant logic doesn't work whichever way you cut the deck.
7 Answers
- Anonymous1 decade agoFavorite Answer
Neither will do much of anything if the money is not spent correctly.
In this environment, the money needs to be spent on increasing demand.
Now who's going to spend it on increasing demand. A very rich few who already spend all they want, or the millions who are struggling to make ends meet?
How you get that money into the hands of those who will spend it to increase demand is not as important as getting into their hands. But I do favor the idea of giving people a $5K tax rebate but only towards the purchase of American made goods and services. This would prevent them from paying off debt or investing it - neither of which would do squat to increase demand.
Source(s): Lol @ several people here. How is giving money to corporations supposed to increase demand? If you were paying attention, you would know they're laying people off because they already have an overabundance of production. They're not going to increase production as long as there is no demand for their product or service. Thus, THEY WILL NOT HIRE no matter how much money you throw at them. - Anonymous1 decade ago
I'll challenge anyone on this question to come up with a valid reason on how raising taxes can increase employment, but you can't include "government jobs". You could certainly increase taxes to 100% and theoretically unemployment would be 0% because then everyone would be an employee of the government.
Someone tell me when was the last time that GOVERNMENT produced ANYTHING other than war. And you can't use the government funding of private industry because that is taking money from one person and giving it to someone else.
- PfoLv 71 decade ago
I agree with Scott H, high corporate tax rates are what is preventing companies from hiring. It is also driving business overseas. Obviously increasing taxes on the wealthy won't create jobs, but cutting their taxes isn't guaranteed to do so. The wealthy might invest in companies that in turn create jobs, but that's a lot of steps, and they could just as easily buy a new yacht or summer home instead.
- 1 decade ago
"In 1942 the top tax rate was increased to 88%, unemployment rate was 4.7%"
WOW! So if we increased the highest rate to say, 99.99%, we should expect unemployment to virtually vanish? (Either that or another world war to break out.)
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- Anonymous1 decade ago
Ending the IRS completely.
- whimsyLv 61 decade ago
Well, what is hoding back jobs is that banks are not lending paper to businesses and individuals
