1980s tax cuts caused growth?

[pdog]

The common rejection I get to restoring top bracket rates to pre-1980's levels is that it would cut growth. However, I just graphed the "Percent change from preceding period" data from BEA National Economic Accounts, and history tells a decidedly different story. Growth was clearly stronger in the 60s and 70s:

.

What say you, trickle downers?

 

[Blue Dog]

The common rejection I get to restoring top bracket rates to pre-1980's levels is that it would cut growth. However, I just graphed the "Percent change from preceding period" data from BEA National Economic Accounts, and history tells a decidedly different story. Growth was clearly stronger in the 60s and 70s:

.

What say you, trickle downers?

Do you have the brackets to compare?

 

[CriticalThought]

But...but...the job creators...

 

[Deuce]

Any discussion of tax rates in a vacuum is pretty much useless.

 

[pdog]

Do you have the brackets to compare?

Yes, sir. Thank you for asking:
The Tax Foundation - U.S. Federal Individual Income Tax Rates History, 1913-2011

But...but...the job creators...

I know, that's a great knee slapper these days. Too bad there's these other crazy CORPORATE TAX RATES that should apply to that argument.

Any discussion of tax rates in a vacuum is pretty much useless.

Hey everybody come over here, there's a bonified congressman on the forum!:2razz:

 

[Diving Mullah]

The common rejection I get to restoring top bracket rates to pre-1980's levels is that it would cut growth. However, I just graphed the "Percent change from preceding period" data from BEA National Economic Accounts, and history tells a decidedly different story. Growth was clearly stronger in the 60s and 70s:

.

What say you, trickle downers?

The only thing this plots says....that the two largest GDP growth in the history of this country were due to

1) FDR New deal and
2) The largest government social program in the history of mankind...WWII...

and subsequently steady growth all the way to 1982, which we then started to practice Reaganomics and naturally the decline!

Gods...that is why I hate Socialist and Liberals!!

Diving Mullah

 

[TurtleDude]

The only thing this plots says....that the two largest GDP growth in the history of this country were due to

1) FDR New deal and
2) The largest government social program in the history of mankind...WWII...

and subsequently steady growth all the way to 1982, which we then started to practice Reaganomics and naturally the decline!

Gods...that is why I hate Socialist and Liberals!!

Diving Mullah

why do you claim to be "Very conservative" when all your posts appear to be leftwing propaganda?

the reason why we had so much growth after WWII was due to the fact that European and Asian manufacturing was toast

 

[Deuce]

Hey everybody come over here, there's a bonified congressman on the forum!:2razz:

Tax revenue is tied to numerous factors, but people talk about taxes as if this isn't the case. For example, the conservative claims mentioned in the OP about growth after Reagan's tax cuts.

 

[Diving Mullah]

why do you claim to be "Very conservative" when all your posts appear to be leftwing propaganda?

the reason why we had so much growth after WWII was due to the fact that European and Asian manufacturing was toast

so your complain is that my "label" is not consistent with what I say??!! And you complain about propaganda? hmmmmm???!!!....

Secondly there reason...we had so much growth During WWII and after is because all infrastructure building, thanks to GI bill and other college assisted program...large influx of white collar workers graduating and moving up socially into middle class, large growth in the middle class due to high paying jobs both Union and No-Union, high income tax on the rich, to recycle the money back into infrastructure and re-investments and government assisted mortgages to help people buy houses and most of all...good solid regulatory laws to keep financial institutions in check and more importantly no market speculations (or at least FCC tax to keep it in check)!

What is so interesting is that we had a very stable systems until mid 70's. Then they started to pull the thread out of some these regulatory laws, and low and behold came our first financial institution claps which was the S&L and the rest is history.....

And if you really need to label me...call me "Eisenhower Conservative"


Diving Mullah

 

[Redress]

Your chart suffers from the same problem most such charts do when used to prove a point. They are used to show correlation, which does not mean causation. Economic growth depends on so many factors a chart like this cannot show the actual effect of any one factor.

 

[Deuce]

Your chart suffers from the same problem most such charts do when used to prove a point. They are used to show correlation, which does not mean causation. Economic growth depends on so many factors a chart like this cannot show the actual effect of any one factor.

I thought I said that but people made fun of me

 

[Redress]

I thought I said that but people made fun of me

You did, so here is a cookie.

 

[AdamT]

Your chart suffers from the same problem most such charts do when used to prove a point. They are used to show correlation, which does not mean causation. Economic growth depends on so many factors a chart like this cannot show the actual effect of any one factor.

Aha, so when you talk about the economy and Reagan, it's just correlation, but when you talk about the economy and Obama it's ALL Obama's fault. I see how it works.

 

[Redress]

Aha, so when you talk about the economy and Reagan, it's just correlation, but when you talk about the economy and Obama it's ALL Obama's fault. I see how it works.

Well you clearly have no clue what position I take on economic issues. Hint: look at what it says under my name for lean.

 

[pdog]

the reason why we had so much growth after WWII was due to the fact that European and Asian manufacturing was toast

I'm not sure that makes a lot of sense. I would guess (couldn't find data that went back that far) we had a trade surplus in that era, not a deficit:
http://www.census.gov/foreign-trade/statistics/historical/gands.pdf Either way can we stay on point here? I'm looking for a correlation of upper tax rates to growth.

Tax revenue is tied to numerous factors, but people talk about taxes as if this isn't the case. For example, the conservative claims mentioned in the OP about growth after Reagan's tax cuts.

I'll be the first to admit that economics borders on the complexity of chaos theory, and I appreciate your recognition of that in the very argument I'm trying to fight.
However, I never used the word "prove" or "caused." I merely said that history does not support this argument so what other supporting points are their to make?

Your chart suffers from the same problem most such charts do when used to prove a point. They are used to show correlation, which does not mean causation. Economic growth depends on so many factors a chart like this cannot show the actual effect of any one factor.

Can we eliminate all these post-hoc logical fallacy references? In a world of complexity, what DO we have without correlation? Sure, that big bump at 1942 wasn't CAUSED by WWII, but that chart makes it pretty darn easy to say hey look at me? Besides, I'm not proving any point. I'm adding a counter argument to an argument that I believe has no merit but I have an open mind and I'm awaiting any counter argument. I thought that's how a debate worked. We need to figure this stuff out, because right now much dumber people are having these arguments on our behalf.

Bottom line, my chart shows a DECLINE and then consistently lower rates of growth at a time were we made a HUGE change to our tax code. I'm I saying the tax change caused the decline? No. But I am saying there is no evidence (and in fact an inverse correlation) that this change caused growth. But I am awaiting further argument to support the original claim.

 

[imagep]

Aha, so when you talk about the economy and Reagan, it's just correlation, but when you talk about the economy and Obama it's ALL Obama's fault. I see how it works.

I'm glad you finally understand right wing economics.

 

[pdog]

Well I guess we can chalk this topic up as one more baseless oneliner.

 

[ALiberalModerate]

The common rejection I get to restoring top bracket rates to pre-1980's levels is that it would cut growth. However, I just graphed the "Percent change from preceding period" data from BEA National Economic Accounts, and history tells a decidedly different story. Growth was clearly stronger in the 60s and 70s:

.

What say you, trickle downers?

To play the devil's advocate here, the problem with your argument is that you are not talking about total taxation. Federal income tax rates dropped in the early 1980s. However, during that time, state and local tax rates in aggregate may well have went up. So the question is, was the total level of taxation in say 1975 higher or lower than it was in 1985? I would imagine that its actually about the same once state, local, and fica taxes are taken into account.

 

[pdog]

To play the devil's advocate here, the problem with your argument is that you are not talking about total taxation. Federal income tax rates dropped in the early 1980s. However, during that time, state and local tax rates in aggregate may well have went up. So the question is, was the total level of taxation in say 1975 higher or lower than it was in 1985? I would imagine that its actually about the same once state, local, and fica taxes are taken into account.

Everybody pay attention, the above is actually a reasonable point of debate. Thank you, S.D.

To your point, there was no significant change to fica:
Annual Statistical Supplement, 2010 - History of OASDI Coverage, Financing, and Insured Status (2.A1-2.A7)

It's difficult to say for the rest but I'd have a hard time believing that the 35% drop in the upper bracket that occured in the 80s and is still in place today (the upper rate in 1979 was 70%) had an equivalent counter balance. Sales and property taxes are flat in just about every state, so if there was increases, everybody got hit by those increases.

If somebody knows where I could get historical data on state income tax rates i would appreciate it.