Tuesday, October 21, 2008
Barack HOOVER Obama: Raised Taxes...GNP Fell 13.4%...Unemployment Jumped To 23.6%
I will be the first person to point out the complete failure of our nation's education system to actually educate the children of this nation as to the history of this great nation. As a result, our public is subject to revisionist history in which nearly half of Americans believe that higher taxes and massive government spending is good for our economy. Revisionist history has distorted our past and led our nation down a path whereas most Americans have no idea of the principles and beliefs of our founding fathers. The strength of our nation, the ingenuity that led an industrial revolution, transformed the feudal system that ruled the world, created a nation with the largest wealth of any nation in history and created a strong middle class society built upon opportunity is under assault.
Our nation is a union of states, built upon the belief of equal representation and small centralized government that recognizes State's rights and protects those rights. Our founding fathers feared the mentality of political parties; they feared large government; and they feared the control and inevitable stripping of rights that would follow the establishment of a large government. Today, we are faced with a financial crisis in which we have the opportunity to embrace the ideals that this nation has held true for 232 years; the idea that economic strength rests in the people, not in the government and the idea that the true strength of our nation rests in inhibited opportunity and equal representation. OR...We can abandon our proud 232 years of tradition and self-determine that the economic strength of our nation rests in our government, not in the ingenuity of the American worker. We have faced economic troubles just as we do today, and the path that we should take rests in understanding our past.
In 1931, facing an economic crisis as our nation was entrenched in a 2 year recession, our government abandoned the traditions of our nation and in a bold populist move an unpopular president in Herbert Hoover called upon Congress to raise corporate income taxes and raise personal income tax rates. As a result, the corporate tax rate jumped nearly 15%, estate taxes were nearly doubled and individual income taxes were increased, with the top tax rate increasing from 25% to 63%. To this date, the 1932 Revenue Act is the largest peacetime tax increase in US history; that is until the proposal put forth by Senator Obama.
The Revenue Act of 1932 was first proposed in 1931 and would not be enacted until June 6th, 1932. At the beginning of 1932, Unemployement rested at an astonishing 15.9% and GNP in 1931 had fallen by 8.5%.
Senator Obama's tax plans are nearly identical to those of the 1932 Revenue Act, whereas Estate Taxes would jump exponentially, the second highest corporate tax rate in the world would become the highest and personal income taxes would jump substantially for millions of small business owners and workers across the nation. Obama's tax proposals would represent the largest revenue based tax increase in US history and act in direct contradiction to the tax policies of both Reagan and Kennedy.
So how successful was President Hoover's tax increase?
In the second half of 1932 the economy completely collapsed in the United States. By the November elections, unemployment had jumped an astonishing to an astonishing 23.6% and the GNP fell a record 13.4%. In March of 1933 the nation would face a third banking crisis prompting Roosevelt to declare a National Bank Holiday to halt the run on financial institutions. By the end of 1933 GNP would continue to fall and unemployment would reach a record 24.9% as one out of every four Americans would be without a job. Roosevelt would rely upon heavy deficit spending in an attempt to keep the country afloat. Yet, at the end of 1938, our nation would still suffer under a 19.0% unemployment rate.
WWII would save the US economy. Taxes would increase again in 1943 to help pay for the war effort and in 1945 to help slow economic growth and divert funds to the rebuilding of Europe and East Asia.
Obama's tax proposals will not work, just as the similar 1932 Revenue Act did not work. We have traveled down this path before, the populist view is that tax increases will somehow eliminate the disparity between the classes. In reality though, Obama's tax increases will only tax those who are building wealth, investing their money and creating jobs. The wealthy will not see their assets shrink, in fact their assets will continue to grow, the progressive taxes will prevent more Americans from reaching the top tier and the disparity between the "haves" and have-nots" will only grow.
It is 1932, unemployment is rising, the financial system is on the brink and the question for America is do you really want another Hoover tax plan?
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