[Jongpil Yun]

Originally Posted by noodles

I would say that no one did anything but make it worse. The stock market crash of 1929 caused an almost immediate recession. Harding's answer was to severely raise (from 25% to as high as 65%) taxes on the rich, virtually insuring that they would not invest in new businesses. FDR--who I like to call the most overrated president in American history--expanded Harding's misguided social programs, and created a whole bunch more. This accomplished nothing more than moving jobs from the private sector to the government sector. He also pleaded with businesses to sharply raise the minimum wage, launching massive waves of unemployment, to the tune of 25%.

No. The core problem of the depression was a paucity of demand, hence the unwillingness to invest. FDR's social programs (and the war, following that) stimulated demand, jump starting the economy, while at the same time improving infrastructure. FDR could have lowered taxes to 0% and it wouldn't have helped much. Business is motivated to invest by the prospect of future profit, and there was no prospect of future profit because of the hoarding behavior during the depression.

Harding lived before the time of the idea of countercyclical government spending as well, hence his mistake.

Alan Greenspan is hardly a model of sound fiscal policy. He blew bubble after bubble by relentlessly printing money to bail out irresponsible industries, while never realizing what he was doing. If you read any of his speeches as Fed chairman from the 90s leading up to the dot com bubble and burst, you'll realize he had no idea what was going on, and only after the unwinding did he start making the excuse that he saw the bubble coming, tried to prevent it, but failed. He also thanked the very financial contrivances we have to thank for today's recession for bailing us out in 2001, while promoting the housing bubble with his Greenspan Put. Bernanke is, at the moment, helping blow a commodities bubble. Greenspan was hands down, the worst chairman we've had. Volcker was immeasurably better, if simply for the fact that he wasn't so incredibly bad. Greenspan did the opposite of "tightening the belt", he printed money like water for an already overheated and manic economy.

If you want to go back to a time before government involvement in the economy, that's fine, but I'll hope you enjoy the return to a constant vacillation between manic speculation and deep recession.

[The Dark Wolf]

^ Yep.

I tire of long typed out explanations anymore, so I passed, but that's a pretty spot-on analysis.

[Jongpil Yun]

Originally Posted by BigM555

I don't have much background in economics but wouldn't this better be described as a proportional tax?

I would go with a flat tax rate of 16 to up 20% depending on circumstances for everyone.

Nope, that's flat.

I know that some still view this as regressive but that could pretty easily be reconciled with a few simple rules (i.e. 0% tax on incomes below $25k for example, or no tax on "the basics" such as food).

By doing that, all you're doing is shifting the tax burden from the poor to the lower middle. Besides, it seems to me that you're confusing income and sales taxes.

A proportional tax should still be easy to administer (cutting down the massive beuracracy) and with a few simple modifications not be regressive.

A simple progressive marginal tax rate is easy to administer as well. It's everything else that is difficult.