I have a been a student of American History, Politics, and Literature, I have no idea what time you are speaking of when you say that the economic booms were when taxes were universally low. Can you give some examples please? I know that America was most prosperous post world warII and the rich were heavily taxed, look at Eisenhower, Nixon or even Reagan, all had much higher taxes for the rich than Obama has today. Also, regarding 1099's not sure what that has to do with healthcare that Obama has been attempting to implement. Are you saying that 1099's were not required before Obama's healthcare plan, I know that I have had friends in the contracting business that have filed them for decades, or are you saying that the 600 dollar limit is new and lower than the old limit? I also don't agree with you when you say private industry always does better than the government, and my case in point would be the prison systems. They are privatized and cost more than ever before while simultaneously paying lobbyists in Washington to keep their prisons filled with people, like the people on this site that enjoy growing a mostly illegal plant, a real "fuck em while they are coming and going", at least that is what I see. I understand capitalism, but it needs to be regulated in order to maintain fairness and keep industry accountable for standards of quality, hence the need for government oversight.
Post ww2 'boom' is a myth propagated by Keynesian economists.
Roaring 20's and Mellon Tax Cuts.
The Mellon Tax Cuts
When the federal income tax was enacted in 1913, the top rate was just 7 percent. By the end of World War I, rates had been greatly increased at all income levels, with the top rate jacked up to 77 percent (for income over $1 million). After five years of very high tax rates, rates were cut sharply under the Revenue Acts of 1921, 1924, and 1926. The combined top marginal normal and surtax rate fell from 73 percent to 58 percent in 1922, and then to 50 percent in 1923 (income over $200,000). In 1924, the top tax rate fell to 46 percent (income over $500,000). The top rate was just 25 percent (income over $100,000) from 1925 to 1928, and then fell to 24 percent in 1929.
Secretary Mellon knew that high tax rates caused the tax base to contract and that lower rates would boost economic growth. In 1924, Mellon noted: "The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business." He received strong support from President Coolidge, who argued that "the wise and correct course to follow in taxation and all other economic legislation is not to destroy those who have already secured success but to create conditions under which every one will have a better chance to be successful."
The Effects of the Mellon Tax Cuts
It is often assumed that broad cuts in income tax rates only benefit the rich and thrust a larger share of the tax burden on the poor. But detailed Internal Revenue Service data show that the across-the-board rate cuts of the early 1920s-including large cuts at the top end-resulted in greater tax payments and a larger tax share paid by those with high incomes. Figure 1 focuses on those earning more than $100,000. As the marginal tax rate on those high-income earners was cut sharply from 60 percent or more (to a maximum of 73 percent) to just 25 percent, taxes paid by that group soared from roughly $300 million to $700 million per year. The share of overall income taxes paid by the group rose from about one-third in the early 1920s to almost two-thirds by the late 1920s. (Note that inflation was virtually zero between 1922 and 1930, thus the tax amounts shown for that period are essentially real changes).
The tax cuts allowed the U.S. economy to grow rapidly during the mid- and late-1920s. Between 1922 and 1929, real gross national product grew at an annual average rate of 4.7 percent and the unemployment rate fell from 6.7 percent to 3.2 percent. The Mellon tax cuts restored incentives to work, save, and invest, and discouraged the use of tax shelters.
The rising tide of strong economic growth lifted all boats. At the top end, total income grew as a result of many more people becoming prosperous, rather than a fixed number of high earners getting greatly richer. For example, between 1922 and 1928, the average income reported on tax returns of those earning more than $100,000 increased 15 percent, but the number of taxpayers in that group almost quadrupled.
<Hmmm. Trickle down?>
During the same period, the number of taxpayers earning between $10,000 and $100,000 increased 84 percent, while the number reporting income of less than $10,000 fell.
The decade of the 1920s had started with very high tax rates and an economic recession. Tax rates were massively increased in 1917 at all income levels. Rates were increased again in 1918. Real GNP fell in 1919, 1920, and 1921 with a total three-year fall of 16 percent.
(Deflation between 1920 and 1922 may also help explain the drop in tax revenues in those years, evident in Table 1).
As tax rates were cut in the mid-1920s, total tax revenues initially fell. But as the economy responded and began growing quickly, revenues soared as incomes rose.
By 1928, revenues had surpassed the 1920 level even though tax rates had been dramatically cut.
1099s and Obamacare -
The 1099 'limit' will be raised in 2012, but it now reporting requirements 'covers' more areas. Everyone used to think, 'oh thats just for contractors', but its not. And it ABSOLUTELY has to do with Obamacare.
"Section 9006 of the health care bill -- just a few lines buried in the 2,409-page document -- mandates that beginning in 2012 all companies will have to issue 1099 tax forms
not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year."
Right now, the IRS Form 1099 is used to document income for individual workers other than wages and salaries. Freelancers receive them each year from their clients, and businesses issue them to the independent contractors they hire.
But under the new rules, if a freelance designer buys a new iMac from the Apple Store, they'll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.
The bill makes two key changes to how 1099s are used. First, it expands their scope by using them to track payments not only for services but also for tangible goods. Plus, it requires that 1099s be issued not just to individuals, but also to corporations.
Regulation == fairness? Haha Ok.
You realize Fedex now delivers/moves USPS mail right?
'Privatized' prisons are burdened by regulations that even the government couldn't work within. Not really a 'fair' example.
Allow a private company to compete in an unencumbered market and it will always beat the government. They are arguing about 'shutting down the government' right now. What would a private company do? They would have preemptively cut spending, perhaps laid off workers, etc. Whats the governemnt do? Increase 'earnings' by increasing taxes, hire more people to ENFORCE the new 'earning potential', feign like they care that they will 'be shut down' and continues ever expansion...
