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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Steve Dietrich who wrote (347946)	1/26/2003 3:39:55 AM
From: Peter O'Brien	Read Replies (1) \| Respond to of 769670

>Economic growth has historically been much >stronger during high tax times (like FDR) than >low tax times (like Reagan). Perhaps this is because politicians only are motivated to cut tax rates when the economy gets into serious trouble after a period of unsustainable high tax rates? Once the economy is out of jeopardy, then the politicians raise tax rates (by too much) again, and the cycle repeats... If you agree that 1980 was a particularly bad economic situation, I still don't see how you can be so critical of the early results of the Reagan tax cut. It took several years to kill the dangerous near-runaway inflation that was occurring at the time. Do you really think that Carter would have done any better in the early 1980's with more and more people getting bumped into 50% or even 70% tax brackets just because of inflation (i.e., no real rise in their incomes)? I think we would have had a calamity on the order of the Great Depression if Carter's tax policies had persisted. Regarding "effective" tax rates, I am of the opinion that "marginal" tax rates are much more of an influence on economic activity. If the tax rates are steeply progressive, then people are going to look for tax shelters or will otherwise alter their activities in order to avoid (as much as possible) the highest "marginal" brackets even if their "effective" rate might still be considered to be at a "reasonable" level.