WOODROW WILSON AND THE LAFFER CURVE

If you were to ask the question, “Who was America’s most socialistic president ever?” A young person would say Barack Obama (an honest young person, that is).  An older person might say Franklin Roosevelt.  A historian would probably name Woodrow Wilson.  He at least belongs high on the list.  The only reason Wilson is not better known for his socialism is that he accomplished little of it because the American people were not yet ready to accept any of it.

Wilson was a Democrat, of course.  To see how far that party has come in the last 90 years, consider this quote.  (Hat Tip to Stephen Hayward)

“The Congress might well consider whether the higher rates of income and profits tax can [ ] be effectively productive of revenue, and whether they may not, on the contrary, be destructive of business activity and productive of waste and inefficiency.  There is a point at which [ ] high rates of income and profits taxes destroy energy, remove the incentive to new enterprise, encourage extravagant expenditures and produce industrial stagnation with consequent unemployment and other attendant evils.” Woodrow Wilson 1919

Can you imagine any Democrat making that statement today?  How high would tax rates need to go before the Left might say something like that again?  In 1919 the top tax bracketwas applied both to wages and to capital gains from investment.  The rate was 73%.  Wilson was beginning to wonder if that might be enough.

DAN MITCHELL

Dan Mitchell is here from the CATO Institute. Poke him in the nose with your cursor and he will explain it for you. (Sorry about that, Dan)

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