7 ms·
What I don't understand is how in the US in the 1920s the tax rate was in the single digits while deficit was negative (!) and debt was low [1], while today tax
by rsp1984 11y ago
What I don't understand is how in the US in the 1920s the tax rate was in the single digits while deficit was negative (!) and debt was low [1], while today tax rates are at 40%, deficit is about 17% (!) of budget and debt is over 100% GDP. What on earth went wrong?
[1] http://www.usgovernmentspending.com/debt_deficit_brief.php http://www.usgovernmentspending.com/debt_deficit_brief.php
- dllthomas 11y ago"What on earth went wrong?" Immediately thereafter? The Great Depression.
- rsp1984 11y agoWell that one wouldn't have lasted until today, would it?
- mhuffman 11y agoThe govt. began to care for people that had previously been cared for by family members or religious groups. This includes the very poor, the elderly, the disabled, etc. That makes the bulk of it.
- jhayward 11y agoEnormous military spending makes up the bulk that is not (at least theoretically) paid for by the SS trust fund.
- rayiner 11y agoMilitary spending is only 3-5% of GDP while total government spending has gone up from 10% of GDP to over 35%. The vast majority of the increase is not military spending.
- cft 11y agoIn exchange for votes from such people. Before, many of those people were disenfranchised.
- cubancigar11 11y agoFamily system used to take care of elderly and the disabled, which ultimately meant housewives were supposed to do that, unless you could afford a caretaker (which was socially frowned upon in middle class). Then women got voting power and family system broke down, replaced by social structure. In a way today's capitalist Europe is closer to what Marx suggested than USSR.
- deleted 11y ago[deleted]
- dllthomas 11y agoSorry, my comment was too oblique. My points were two. First, a whole lot of things have happened since, to the point that the environment we're operating in now is quite substantially different. Second, the shallow numbers may mislead in trying to determine what's better - maybe something went right. Higher spending is only bad if we're not getting value for it. Mostly, it boils down to "you're not going to get very far analyzing it at this level."
- Frozenlock 11y agoWe can make a list of things that happened around those years... Women's suffrage in the USA was in 1920, wasn't it? :-p
- kspaans 11y agoKeep in mind that the article compares Fitzgerald's effective rate (5.5%) to the equivalent marginal bracket (40%) today. If you are in a higher tax bracket you don't pay that rate on all of your income. I'm not too familiar with US federal and state taxes and other deductions, but I would bet the effective rate for someone in the 40% bracket is closer to 30% (similarly to Canada and the UK).