It began as an answer to a question. Why do economies crash when taxes are cut, and grow when taxes are raised?

The historical evidence is overwhelming. Tax cuts caused the Great Depression. Tax increases caused a bounce back. Tax Cuts caused the second part of the Great Depression in 1937. Tax increases almost up to 100% during WWII gave us the most booming economy in our history.

The 50’s with high taxes, were a boom for America’s business. The boom continued up until Reagan announced a tax cut was part of his platform. A recession followed. As the economy got itself back together, the lowest tax cuts ever in Americas history were enacted in 1988. A huge recession followed. Almost as soon as the Clinton return to a higher tax rate was enacted, the economy bounced back, never stopping until Clinton’s successor, began trumpeting his version of tax cuts. As they were enacted, the economy slumped. It has never recovered, because the Bush Tax Cuts have never been rescinded. One year ago, as it looked probably that the tax cuts would be allowed to expire by the Democratic Congress and President, the economy began roaring back. Then, in November, the Republicans balked in the Senate, and without enough votes, the ice cold water of more tax cuts, put out the economic embers before they could ignite the economy’s flame….

The answer is simple. When you have low taxes, there is great incentive to take money out of the economy and gamble with it….

When you have high taxes, there is great incentive to bury your profits back into the economy by expanding ones business, such as building more manufacturing plants, investing more in research and development, paying more for your employees and their benefits, for the very simple reason that if you have low profits on paper, you have lower taxes…

All that money buried in your own business, is still yours.

America signed on the the Reagan mantra that low taxes would create investment opportunities for businesses to build more plants. Had that been so, then Reaganomics might have worked.

Problem was that corporate profits went instead, to overseas, or, were used to buy existing corporations and joined two companies together, cutting excess jobs. One can see this in Delaware by the elimination of lots of small Delawarean banks that used to dot our landscape.

It seems ironic that countries on the international scale that have the Republican ideal of government, such as low taxes and no regulation whatsoever, are poor like Paraguay. Those on the opposite extreme, with high taxes and lots of rules, have a rather high standard of living for almost all of its citizens… like Norway and Switzerland.

Would you rather live well? or live poorly?

If you chose living well, you should rejoice that now, we are having the idea discussed here in this country, of raising the taxes on the wealthy, just so they choose to invest here in America, in the form of building real jobs, for the very reason they don’t want to pay those higher taxes….

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