Saturday, October 18, 2008

Hoover and Taxes

McCain mentioned Hoover raising taxes during the Great Depression. And yes he did sign a rate increase in 1932. However, the Great Depression started in October 1929 and had been going on for 2 1/2 years before Hoover raised them. Further, the Tax Burden in 1932 was so small that the increase in income taxes made little difference. Total GNP in 1932 was $58 billion, total internal revenue receipts $1.5 billion. Federal Internal Revenue taxes therefore were less than 3% of GNP. And there was no social security payroll tax.

By comparison during the Boom year of 1950 internal revenue receipts were $40 billion out of GNP of $284 billion - almost 15 percent.

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