@parados,
parados wrote:The largest reason for the increase in government revenues is simply the increase in GDP.
Federal revenues as percent of GDP in 1965 was 17%. Federal revenues as percent of GDP in 2008 was 17.8%.
Fact - taxation compared to GDP has gone UP, not down since 1965. Until you can prove that taxation has gone down, your argument is false. Simply pointing to the decrease in the top rate is meaningless since people are paying a higher effective tax rate even with the lower marginal rates.
GDP increased 1965 to 2007, because more successful businesses were started and more successful businesses started to grow after 1963, when TRs/NI (i.e., tax rates per net income) were decreased. TRs/NI generally decreased as the maximum TR/NI was decreased.
The maximum TR/NI decreased from 91% in 1963, to 77% in 1964, to 70% in 1965. Except for the changes of maximum TR/NI to 75.25% in 1968, to 77% in 1969, to 71.25% in 1970, the tax rate from 1965 to 1980 was 70%.
In 1981, the maximum TR/NI began to decrease again from 69.125% in 1981, to 50% in 1982, to 38.5% in 1987, to 28% in 1988. As the maximum TR/NI decreased in that period, more money became available in the private economy to invest in starting and growing businesses. As the number and sizes of businesses grew, GDP grew.
There was more money available in the private economy after 1963, because the maximum TR/NI had decreased from 91% after 1963 to 28% in 1988, and did not increase again to more than 39.6% thereafter. It was increased to 31% in 1991, to 39.6% in 1993. It was reduced again to 39.1 in 2001, to 38.6 in 2002, to 35% in 2003, triggering even faster growth. The current recession acceleration in 2008 is due to the federal government failing in 2001, 2003, and in 2006 to curtail the irresponsible lending of Fanny & Freddy with its deleterious impact on the USA credit market .
