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What Was the MTR in the Decade Before The Depression?



October 25, 2009 – Comments (4)

Can The Republican Party recover from their politics? (I hope not). 

During the 8 Reagan years, when marginal rates were sharply cut (but deficits were substantial), equities on the NYSE and the S & P 500 about doubled.

During the 4 Bush 41 years, when the top MTR was increased (only slightly), equities rose about 50%.

During the 8 Clinton Years, when MTRs were substantially increased, equities tripled, deficits turned into large surpluses (as far as the eye could see, leading some to fear that the Fed would be unable to conduct monetary policy if the public debt was redeemed).

The market today is roughly where it was (a bit higher) when Bush 43 took over, who cut MTRs, but ballooned the deficit.

So, Bush 41 and Clinton raised MTRs without tanking the economy, and Clinton left Bush 43 with a fabulous fiscal situation.

So much for the Republican argument that reducing MTRs is the nirvana of tax/economic policy and raising MTRs its death knell. 

And in the decade before the Depression? Go find out for yourself. You won't want to believe me.

4 Comments – Post Your Own

#1) On October 25, 2009 at 10:04 PM, davejh23 (< 20) wrote:

"During the 8 Clinton Years, when MTRs were substantially increased, equities tripled, deficits turned into large surpluses (as far as the eye could see, leading some to fear that the Fed would be unable to conduct monetary policy if the public debt was redeemed)."

It was a bubble!  Our current recession started with the dot com bust...we just had a decade of artifically low interest rates and ballooning debt that never should have happened.  The Bush administration shouldn't have allowed interest rates to be held so low for so long, and the Dow never should have reached 14K.  We should have had a more severe recession early this decade...if the Bush administration had been more conservative, this would have been blamed mostly on Clinton's "fabulous fiscal" leadership.

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#2) On October 25, 2009 at 10:37 PM, devoish (78.10) wrote:


Yes. It was a bubble. Excellent. The bubbles began to form in the eighties when Reagan cut the highest marginal taxe rates leaving a few people with so much extra money they bought crap that wasn't worth it.

First the S&l crisis, then the dotcom bubble, then the housing bubble, then a commodities bubble, next?

And all along the cheap foreign labor bubble has been percolating along.

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#3) On October 25, 2009 at 11:38 PM, starbucks4ever (88.63) wrote:

The Republican nonsense was always just that - nonsense. But for all that, let's not demonize baby Bush. Compared to the current Yes We Can crowd, he was a fiscally conservative statesman and a big believer in reasonable asset valuations. 

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#4) On October 26, 2009 at 12:10 AM, checklist34 (98.78) wrote:

I am in the highest tax brackeet, I am a former owner of several businesses and more than likely future owner of many, or at least some, more. 

So I guess that I'm the guy that everybody is panicking about, huh?

If you tax me, the world will end, the economy will collapse, the markets will collapse, end of days?

I don't see it.  Absolutely no way that raising my taxes 5% on capital gains and income (all thats currently on the table) impairs me from starting a business.  In fact I honestly don't think its even something I'd bother to consider. 

If you raised tax rates to 70% for income beyond, say, $1 mil that ... would have some impact.  There would be little point at all in starting a business that intended to get big.  May as well start one aimed at delivering, say, $250k or $500k of income and forget any dreams of starting a biz that got big.  

I am in favor, all in all, of the current proposed tax raises and the evidence offerd by the OP is more than enough to justify the stance that they won't cripple investment in business.  

Much more than being in favor of raising taxes on myself, I'm in favor of differentiated tax brackets.

Why should a baseball player making $5mil have the same tax rate as a small manufacturing business who's owner makes $5 mil?  Why shouldn't exports have tax incentives?  Why shouldn't job creation have tax incentives?

Why, on earth, should a hedge fund manager (who creates no wealth, but rather seeks to transfer it to his/her clients and him/herself from others) have the same tax rate as someone who starts a manufacturing company?  Who invents something?  Who finds a way to convert garbage into car fuel? 

That, my friends, is absurd.  Yet in our society today the hedge fund manager is cool, the baseball player is a god among men (despite neither of htem really contributing anything to the greater good) while the inventor and entrepreneur manufacturing htings is treated like the antichrist.  Demonized by hollywood, by the law, more regulations and BS shoved down his throat than you'd even believe.

Thats the real crime here.  Not differentiating between productive and non productive or even destructive forms of income.

Who, really, is more valuable to soceity?  Said inventor/owner of productive business or, say, a personal injury attorney running class action lawsuits over spilled coffee?


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