Tax Increases and the Great Depression

Chris EdwardsDid tax increases deepen and extend the Great Depression?That is one topic explored in a  new book by Art Laffer, Brian Domitrovic, and Jeanne Cairns Sinquefield,Taxes Have Consequences: An Income Tax History of the United States. The authors include a  discussion of federal, state, and local tax increases during the 1930s.Many economists would point to monetary policy mistakes for causing the initial slide into the Great Depression. The nation ’s money supply fellnearly 30 percent between 1930 and 1933.But Laffer and coauthors argue that the “chief cause of the Great Depression was taxation.” That is a bold claim because policymakers mademany mistakes during the 1930s. Aside from adverse monetary and tax policies, the government undermined the economy with regulatory interventions, labor union laws, and a  general antagonism toward businesses and high earners. George Selgin discusses the era’s economic policieshere.Let ’s explore the major tax increases of the 1930s, based on the Laffer book, ananalysis by Alan Reynolds, and numerous other sources. Herbert Hoover signed the first two laws listed here and Franklin Roosevelt the others.Smoot ‐​Hawley Tariff Act of 1930. Signed in June, the act raised import tariffs on thousands of goods. Two ‐​thirds of the tariffs were specific charges per unit, so thereal burden rose as prices fell during the early 1930s. In response, foreign nations retaliated against U.S. trade. The stock market dropped c...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs