Political Memes: JFK cut taxes to 'grow the economy' (xposted from FB)
This meme also touches on the cutting taxes to make more money fallacy; it's that JFK cut taxes in the manner that Conservatives want to do (and accomplished under George W. Bush).
Here's the case: JFK followed sound monetary policy when he recommended cutting taxes to Congress. Cutting taxes encourages unemployment to fall, and JFK reduced taxes mostly through allowances and tax credits to combat joblessness (which was at 7%).
The primary income tax cut was made to the topmost tax rate, which was a staggering 91%: this was left over from WWII and had played a major part in the wartime economy, which in turn brought us out of the Great Depression. This was cut to 65% (it's currently 31%).
The result? Unemployment *did* drop - to 4%. The economy, however, slowed significantly and we gained a nasty, creeping inflation that turned dollars into dimes until the Reagan administration. Why?
Because an economy is simply money in motion - cash value shuttling from people to banks to government to industry to workers to exotic dancers.... and so forth.
The more money is being spent, the faster it goes from place to place, the bigger the economy is. When it slows down, when less money changes hands, the slower and smaller an economy is.
And the Federal Government influences the economy because it's the biggest central spending point in the entire structure; choke it and you choke the economy.
Note that inflation was one of the issues that got Reagan elected, and he did get it resolved. During his first term, he went along with the tax cuts and 'trickle-down' economics, which made things worse.
So he turned around and raised taxes, especially that highest tax bracket, and instituted a high capital gains tax. And that worked.
Here's the case: JFK followed sound monetary policy when he recommended cutting taxes to Congress. Cutting taxes encourages unemployment to fall, and JFK reduced taxes mostly through allowances and tax credits to combat joblessness (which was at 7%).
The primary income tax cut was made to the topmost tax rate, which was a staggering 91%: this was left over from WWII and had played a major part in the wartime economy, which in turn brought us out of the Great Depression. This was cut to 65% (it's currently 31%).
The result? Unemployment *did* drop - to 4%. The economy, however, slowed significantly and we gained a nasty, creeping inflation that turned dollars into dimes until the Reagan administration. Why?
Because an economy is simply money in motion - cash value shuttling from people to banks to government to industry to workers to exotic dancers.... and so forth.
The more money is being spent, the faster it goes from place to place, the bigger the economy is. When it slows down, when less money changes hands, the slower and smaller an economy is.
And the Federal Government influences the economy because it's the biggest central spending point in the entire structure; choke it and you choke the economy.
Note that inflation was one of the issues that got Reagan elected, and he did get it resolved. During his first term, he went along with the tax cuts and 'trickle-down' economics, which made things worse.
So he turned around and raised taxes, especially that highest tax bracket, and instituted a high capital gains tax. And that worked.