4 ms·

Anyone know why tax rates heavily spiked in 1941 - 1942? Is this due to World War 2?

by slykat 14y ago

JoshTriplett 14y ago
Yup. Notice the similar spike around World War I. Also notice that the spike went back down fairly soon after World War I, but after World War II they pretty much stayed at the increased level; rather than decreasing spending and taxes back to pre-war levels, the government just found other ways to spend it and continue growing.
- deleted 14y ago
  [deleted]
- timr 14y ago
  "rather than decreasing spending and taxes back to pre-war levels, the government just found other ways to spend it and continue growing." Well golly, let's not let facts get in the way of a good story. The federal government had a huge debt to pay down after the war. The debt as a fraction of GDP spiked to an all-time high after WWII, and steadily declined until the late 70s. The higher taxes were going toward that debt. Then we dramatically cut taxes in the late 70s, and the debt started climbing again. http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt
  - coolj 14y ago
    That may be true--I'd like to know what specific tax cuts you're referring to. It also looks like it was the 80's when the debt really started growing, according to the numbers in that article. It's true that government spending (as % of GDP) never went back to pre-war levels, and has continued to increase: http://en.wikipedia.org/wiki/Government_spending#United_States_of_America http://en.wikipedia.org/wiki/Government_spending#United_Stat...
    - timr 14y ago
      I'm referrig to the massive drop in all tax rates starting around 1979(which are clearly visible in the chart on the page that this comment thread is discussing.)
  - JoshTriplett 14y ago
    > The federal government had a huge debt to pay down after the war. Granted, but if spending had otherwise returned to the previous levels then that debt would have gone away entirely and then the new taxes along with it. That rather obviously didn't happen. :) A now-deleted sibling comment linked to the corresponding spending levels, which confirm the continued spending (note that this graph doesn't even include the debt): https://upload.wikimedia.org/wikipedia/en/0/05/Us_gov_spending_histry_by_function_1902_2010.png https://upload.wikimedia.org/wikipedia/en/0/05/Us_gov_spendi...
    - jellicle 14y ago
      Among other things, the government was building the free interstate highway system and a shitload of free public schools for the baby boom generation.
      - bunderbunder 14y ago
        I suspect neither of those was anywhere near as expensive as funding the Cold War.
- njharman 14y ago
  We were still at war, son. The Cold War, gotta prove Capitalism can outspend those pinko commies. Marshall Plan et all.
  - kokey 14y ago
    Well at least they spent some of it on going to the moon and sending stuff to Mars.

Anyone know why tax rates heavily spiked in 1941 - 1942? Is this due to World War 2?

by slykat 14y ago

Anyone know why tax rates heavily spiked in 1941 - 1942? Is this due to World War 2?

Yup. Notice the similar spike around World War I. Also notice that the spike went back down fairly soon after World War I, but after World War II they pretty much stayed at the increased level; rather than decreasing spending and taxes back to pre-war levels, the government just found other ways to spend it and continue growing.

deleted 14y ago
[deleted]
timr 14y ago
"rather than decreasing spending and taxes back to pre-war levels, the government just found other ways to spend it and continue growing." Well golly, let's not let facts get in the way of a good story. The federal government had a huge debt to pay down after the war. The debt as a fraction of GDP spiked to an all-time high after WWII, and steadily declined until the late 70s. The higher taxes were going toward that debt. Then we dramatically cut taxes in the late 70s, and the debt started climbing again. http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt
- coolj 14y ago
  That may be true--I'd like to know what specific tax cuts you're referring to. It also looks like it was the 80's when the debt really started growing, according to the numbers in that article. It's true that government spending (as % of GDP) never went back to pre-war levels, and has continued to increase: http://en.wikipedia.org/wiki/Government_spending#United_States_of_America http://en.wikipedia.org/wiki/Government_spending#United_Stat...
  - timr 14y ago
    I'm referrig to the massive drop in all tax rates starting around 1979(which are clearly visible in the chart on the page that this comment thread is discussing.)
- JoshTriplett 14y ago
  > The federal government had a huge debt to pay down after the war. Granted, but if spending had otherwise returned to the previous levels then that debt would have gone away entirely and then the new taxes along with it. That rather obviously didn't happen. :) A now-deleted sibling comment linked to the corresponding spending levels, which confirm the continued spending (note that this graph doesn't even include the debt): https://upload.wikimedia.org/wikipedia/en/0/05/Us_gov_spending_histry_by_function_1902_2010.png https://upload.wikimedia.org/wikipedia/en/0/05/Us_gov_spendi...
  - jellicle 14y ago
    Among other things, the government was building the free interstate highway system and a shitload of free public schools for the baby boom generation.
    - bunderbunder 14y ago
      I suspect neither of those was anywhere near as expensive as funding the Cold War.
njharman 14y ago
We were still at war, son. The Cold War, gotta prove Capitalism can outspend those pinko commies. Marshall Plan et all.
- kokey 14y ago
  Well at least they spent some of it on going to the moon and sending stuff to Mars.