Saturday, October 25, 2008

Reprise: When Carter "spread the wealth"

Check out the tax rates when Jimmy Earl Carter served as "president" in '78.

That's right. Carter's tax rates "spread the wealth" by confiscating 70% of any earnings over $203K. Seventy percent! That motivates a lot of folks to demand cash, hide income, cheat, operate in the black-market and/or not bother to work any harder. Even if you earned only $47K, Carter wanted half. Half!.

As for the results? In 1980 Time magazine put it this way.

...inflation is not only a frightening economic problem but is rapidly becoming Carter's most dangerous political liability as well... In the past few weeks, however, a new side of inflationary psychology has begun to show itself among businessmen and investors: plain, old-fashioned fear. Executives talk of inflation rates going to 20% or more in the next few months, creating an environment in which reasonable planning is impossible. The jitters have unhinged the investment markets. As recently as mid-February, stocks were widely considered a hedge against inflation and thought to be grossly undervalued. The Dow Jones industrial average hit a high of 904 on Feb. 13. But since then it has tumbled 92 points, to 812; nine points of the decline came last week. The average is now lower than it was 16 years ago.

Sound familiar? Maybe there's validity to the contention that the recent stock market turmoil can be termed an "Obama Panic". That is, investors anticipate a disastrous set of Carter-esque policies that send the economy into a tailspin and respond accordingly.

What were the results of Carter's "wealth-spreading" policies?

Inflation rose dramatically, nearly touching 15% by 1980.

Unemployment rose to 11% shortly thereafter. The economy didn't return to health until President Reagan spearheaded lower tax rates.

The history is clear: oppressive tax rates for the "rich" (really, just businesspeople small and large) is disastrous for employment and wounds the economy.

Starting to get the picture? Really feel like experiencing a 1980's style economic disaster? Then I urge you to vote for Barack Obama.

Update: Amil Amani at the American Thinker: "Obama's economic plan is a recipe for long-lasting disaster. Keep in mind that wrecking anything, as opposed to building things, requires very little time and effort. Obama's plan is deceptively attractive, while in reality it is a huge wrecking ball that will capsize the already listing ship of our economy. Here is a partial list of reasons why..." And The Wall Street Journal: "Business Finally Fights Back - The business community is back in politics. After years of contented political gridlock, American companies are now officially horrified at what an all-Democratic Washington intends to inflict on the U.S. economy. The Chamber is throwing its extensive resources at denying the left a filibuster-proof Senate. In doing so, it has stuck its finger in the Democratic leadership's beehive, and is facing retribution..."

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