Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and beginning April 20th, 2021 (Eastern Time) the Yahoo Answers website will be in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.

How can low tax rates cause economic expansion when history shows otherwise?

It makes me sick when people say Reagan's tax cuts caused economic expansion. Have they ever studied history.

Tax rates for the wealthy topped out at more than 90 percent from the mid 1940s to the early 1960s.(BIGGEST BOOM TIME IN AMERICAN HISTORY) They then dropped to 70 percent during Lyndon B. Johnson’s presidency before nose-diving to 28 percent at the end of Ronald Reagan’s presidency.(RECESSION AFTER REAGAN UNDER BUSH ONE) Under George H.W. Bush they increased to 31 percent, under Bill Clinton they increased to 39.6 percent (ANOTHER ECONOMIC BOOM TIME) and under George W. Bush they dropped to 35 percent. Yet another change took place this January, mandating that the richest Americans—categorized as individuals who make over $400,000 and married couples who make over $450,000—once again pay 39.6 percent.

7 Answers

Relevance
  • 8 years ago
    Favorite Answer

    Increasing taxes is basically redistributing wealth. You take more money from an individual who is productive: creates jobs, invests, spends.. To a man who mooches off of welfare checks. You create more tax revenue (this is where the average liberal doesn't understand, I mean I can't blame them b/c they have NO understanding of economics or business whatsoever) by taxing less. It's called the laffer curve, by taxing more you essentially waste that money by going to social programs and other worthless bullshit. By keeping it in the private sector, it gets invested, borrowed, creates jobs.. Over the long run, taxing less will create more tax revenue rather than increasing taxes.

  • ?
    Lv 5
    8 years ago

    "Tax rates for the wealthy topped out at more than 90 percent from the mid 1940s to the early 1960s.(BIGGEST BOOM TIME IN AMERICAN HISTORY)"

    Not even close to being true. The 1920's and the 1870's were the greatest peacetime expansion. The great depression didn't end until 1946 - unless you count making a bunch of crap and blowing it all up as prosperity. The top tax rate was 90% for NOBODY. Not ONE PERSON ever paid a tax rate of 90%.

    Bill Clinton also slashed government spending and cut capital gains tax by an effective rate of 44%.

  • ?
    Lv 4
    8 years ago

    First of all, the US experienced now unfathomable economic growth for the first 400 years of our existence before we ever had a national income tax in 1913.

    Since WWII, federal income taxes have been cut 4 times; by Kennedy, Reagan twice, and Bush Jr. All four times tax revenues actually went up due to increased GDP from the economic expansion of more people working and paying taxes. Look it up.

    To dispute some of your points:

    1. After WWII we did have a top bracket of 90%, but there were very few people earning enough to qualify. The economic expansion post WWII was because America was called upon to rebuild all of Europe. Europe was ravaged by war and did not have the factories or infrastructure at the time to rebuild itself and we profited because of it.

    2. Bill Clinton's tax increases are in no way responsible for the economic boom of the 1990's. The invention of the internet and the subsequent proliferation of computers "the dot-com boom" created an entire new industry out of thin air and millions upon millions of new jobs that didn't exist before. He just happened to be president during a time of great innovation.

    Wealth is always created from freedom. Government is the direct negation of freedom. Government cannot create any wealth, in fact it destroys wealth. In a free marketplace, if I exchange goods and services with you, we both benefit and become wealthier or we wouldn't do it. You buy a new car because you'd rather have that car than the money you used to pay for it, and the car dealer would rather have your money than the car he sells you. It makes both of your lives better because you both freely consented to it. The only monetary transaction that does not create wealth for both parties is one that is forced. Taxes are forced, so they do not create any wealth for the person paying them. Therefore, the higher the taxes the less wealth is created than otherwise could have been if the people were allowed to spend that money how they wished.

  • 8 years ago

    Do you remember the Great Depression of 1920. Probably not because in 1921 taxes were lowered and that resulted in Roaring Twenties. In the early 1980's taxes were lowered and the result was the longest economic expansion in American history

  • How do you think about the answers? You can sign in to vote the answer.
  • ?
    Lv 4
    5 years ago

    Many motives. Low taxes on the wealthy encourages them to take funds out of agencies and devest because of the fact they comprehend they pays a low tax fee. larger rates encourgages them to boost those agencies because of the fact so whilst they are taxed, they nonetheless make a amazing income.

  • Mike
    Lv 7
    8 years ago

    Tax rates have been going back up and look at how bad the economy is doing now.

  • Anonymous
    8 years ago

    shhh..be quiet.. your way above their level the cons are too stupid to be objective

Still have questions? Get your answers by asking now.