WI: America had higher taxes in the 50s and lower in the 60s?

[justiniano]

I'm curious considering the 1950s was the best time to be an American economically speaking (before any of you argue about racism, remember it was 90% white back then) and they  experienced a dip economically in the 60s. So, say the U.S. extracted 21-24% more of the income from the average American during this time and saved up this extra tax money then lowered taxes when the country was less affluent using the saved up money to cover the difference in expenditure during the 1960s what would it mean for the rest of history?

[raharris1973]

There was a substantial tax reduction advocated by the Kennedy Administration and finally passed in early 1964, and 1963 was the last balanced budget year until the 1990s.

Economic conditions did not really dip for American citizens until some inflationary pressures in 1969, possibly 1968. Many people's lives were on hold, and earnings were held back, of course by being drafted and sent to war, or by making decisions - staying in school full time, fleeing the country, being on the run, to avoid the draft.

[simon darkshade]

Beat me to it. The Kennedy tax cuts were a major factor in driving the substantive economic growth of the Johnson years, which were bloody good. What drove the budget deficit was the combination of The Great Society and Vietnam as spending that occurred at the same time.

The economic impact of the draft was negligible and that of draft dodgers derisory.

The 1960s were not a dip, with inflation coming in only substantively in the last couple of years. Low unemployment, growth in both GDP and productivity and technological advances made for good years.

www.tax-brackets.org/federaltaxtable/1960
taxfoundation.org/historical-income-tax-rates-brackets/
www.nbcnews.com/news/amp/wbna29861648

Justiano, you seem to be labouring under an erroneous assumption as to how tax works. It does not work by hoarding up money for later spending or tax cuts, like a personal or family budget. Every bit of income ends up being spent - if not on ordinary budget spending, then on debt reduction, as occurred historically in the 1950s with surpluses. Only when that is out of the way do you see government’s squirrelling money away for the future; the Australian Future Fund in 2001-2007 comes to mind.

[justiniano]

Jul 7, 2022 2:20:39 GMT simon darkshade said:

Justiano, you seem to be labouring under an erroneous assumption as to how tax works. It does not work by hoarding up money for later spending or tax cuts, like a personal or family budget. Every bit of income ends up being spent

Norway seems to do a good job of it though

[simon darkshade]

The Statens pensjonsfond is from surplus oil revenue, not general taxation.

“The purpose of the fund is to invest parts of the large surplus generated by the Norwegian petroleum sector, mainly from
A.) taxes of companies but also
B.) payment for licenses to explore for oil as well as
C.) the State's Direct Financial Interest and dividends from the partly state-owned Equinor.

The United States in the 1950s did not have a state owned oil company, nor Norwegian level corporate taxation, nor a solely federal oil exploration licence regime. Indeed, on the last matter, the US being a very large federal state compared to the circumstances of Norway is instructive.

Now, as of the 1950s, how many sovereign wealth funds existed? 2 - the Kuwait Investment Authority and the Revenue Equalization Reserve Fund of the Gilbert Islands.

Thus, there is a major difference between a SWF using surplus revenues and royalties from minerals and oil and hoarding direct taxation.