Looking Back At the Great Depression – Tax Rates And More

http://www.radioviceonline.com ^ | September 22, 2009 | Steve McCough

[Biggirl]

This is not inside-baseball economics stuff -- don’t be afraid. Arthur B. Laffer at the Wall Street Journal has a good historical review of the Great Depression and what happened with tax rates during the period.

Laffer defines the beginning of the problem, the Smoot-Hawley tariff implemented in 1930.

[Biggirl]

Great commetary.:)=^..^=

[Lurker]

First Smoot-Hawley, then a succession of tax hikes, then a wage freeze, then gold confiscation.

Then everyone was surprised that a Depression ensued.

L

[An American!]

Original Article is at http://online.wsj.com/article/SB10001424052970203440104574402822202944230.html?mod=rss_opinion_main
Here are some choice quotes:

1. 1930 - largest single increase in taxes on trade during peacetime and precipitated massive retaliation by foreign governments on U.S. products
2. Huge federal and state tax increases in 1932
3. Additional large tax increases in 1936 and 1937 that were the proximate cause of the economy’s relapse in 1937
4. Because of the number of states and their diversity I'm going to aggregate all state and local taxes and express them as a percentage of GDP. This measure of state tax policy truly understates the state and local tax contribution to the tragedy we call the Great Depression, but I'm sure the reader will get the picture. In 1929, state and local taxes were 7.2% of GDP and then rose to 8.5%, 9.7% and 12.3% for the years 1930, '31 and '32 respectively
5. In early 1933, the federal government (not the Federal Reserve) declared a bank holiday prohibiting banks from paying out gold or dealing in foreign exchange. An executive order made it illegal for anyone to "hoard" gold and forced everyone to turn in their gold and gold certificates to the government at an exchange value of $20.67 per ounce of gold in return for paper currency and bank deposits. All gold clauses in contracts private and public were declared null and void and by the end of January 1934 the price of gold, most of which had been confiscated by the government, was raised to $35 per ounce. In other words, in less than one year the government confiscated as much gold as it could at $20.67 an ounce and then devalued the dollar in terms of gold by almost 60%. That's one helluva tax.
And Finally...The damage caused by high taxation during the Great Depression is the real lesson we should learn. A government simply cannot tax a country into prosperity

Look at what is happening today...tire import tax, soda tax etc etc.

[SunkenCiv]

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	Gods Graves Glyphs	Arthur B. Laffer at the Wall Street Journal has a good historical review of the Great Depression and what happened with tax rates during the period. Laffer defines the beginning of the problem, the Smoot-Hawley tariff implemented in 1930. Just adding to the catalog, not sending a general distribution. To all -- please ping me to other topics which are appropriate for the GGG list. GGG managers are SunkenCiv, StayAt HomeMother, and Ernest_at_the_Beach
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[SunkenCiv]

The Great Depression, after 2013, will be cited as “the good old days”.