Dispelling The Myth: Taxes And Job Creation
By Robert Emerick & David Rommereim
24 October, 2012
Countercurrents.org
We invite you to talk about something that is very important to all of us: taxes and jobs.
First, we want to remind you that, from 1946 to 1971, taxes were fair and we had higher employment. Fair taxation means that all points on the economic spectrum do their part. To return to tax fairness in our land, it is vital to remember all of the purposes of our government established by the Preamble to our Constitution: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
Second, we are well advised to note the words of Adam Smith, known as the Founder of Free Market theory, who wrote, “… the rich should contribute to the public expense, not only in proportion to their revenue, but something more than…that proportion.” (The Wealth Of Nations, Book V, Chapter II, Part II). Adam Smith also wrote, “The rich, in particular, are interested to…secure…their own advantages.” (The Wealth Of Nations, Bk. V, Ch. I, Pt. II).
Third, the data from independent, unfunded, unsponsored research shows that: During the Great Depression, Federal spending dramatically reduced unemployment by 42.5% between 1933 and 1937 - from 24.9% to 14.3%. At the end of World War II, Federal debt was the highest in history - 120% of our nation’s total annual economic output (GDP, or Gross Domestic Product). And, from 1946 to 1971, we had higher tax rates on the highest incomes, and we actually had more prosperity, a stronger economy, and the Federal debt went down by almost 70%! (See the Facts below.)
Facts about taxes, unemployment, Federal deficits, Federal debt, and real private sector growth:
..................................................................................................From 1946 to 1971: ................From 1972 to 2011:
1. Average tax rates on the highest salaries and unearned incomes: -- 80% ----------------------------- 44.1%
2. Average tax rate on profits from investments (Capital Gains): ------ 25.8% --------------------------- 18.9%
NOTE on Capital Gains: In 2006, “high net worth” individuals tax-sheltered $1.6 Trillion in
“off-shore” accounts - that figure may be higher now.
3. Average unemployment rate: ----------------------------------------------- 4.6% ---------------------------- 6.4%
4. Average annual Federal budget deficit: ---------------------------------- 1.3% ---------------------------- 11.5%
5. Average total Federal workforce: ----------------------------------------- 5.7 million -------------------- 4.7 million
6. Number of Federal Budget surpluses: ------------------------------ 8 ----------------------------------- 4
7. Real average annual private sector growth rate: --------------------- 2.5% ----------------------------- 1.8%
8. Federal debt: ------------------------------------------------------------ WENT DOWN 69.1% --------- WENT UP 167.5%
Conclusion, even with the Great Depression and WWII debt, and, even with the added post-war cost of the Marshall Plan, the GI Bill, and the Eisenhower Federal Interstate Highway System, and, on top of all that, the additional expense of the Korean War, the Cold War, and the Vietnam War, the Federal debt actually went DOWN 69.1% between 1946 and 1971! What’s more, from 1946 to 1971 we had lower unemployment, much lower deficits, and higher real private sector growth. And we had all this prosperity and economic strength with higher tax rates on the wealthy.
Rev. Robert Emerick, Pastor, Bay Ridge United Methodist Church, [email protected]
Rev. David Rommereim, Pastor, Lutheran Church of the Good Shepherd, Bay Ridge, [email protected]
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