McCain/Obama tax plans....

LXguy said
The "Bush 1" recession was from July of 1990 to March of 1991.

The budget that contained the tax increases was passed October of 1990, so saying that the tax increases caused the recession is not acurate, as the US had been in recession for a full three months by the time the budget was passed. The tax increases didn't go into effect until the following year.

Desert Shield started in August of 1990, and the shooting didn't commence until January of 1991. So the war was not the cause either.

The roots of the Bush 1 recession were actually growing with the Saddam Hussein invasion of Kuwait. Oil markets went crazy, pushing up the cost of everything made from petroleum. That budget was actually being argued in Congress for many months prior to it being passed. As an investor, you would have had to been blind to not see the handwriting on the wall. Businesses began holding off spending money for expansion and began laying off employees long before that budget was passed. If you run a business with a small profit margin and you see a big tax increase coming down the pike and you see prices rising, you must cut operating expenses or die on the vine.

Regarding the high tax rates throughout the 20th Century: the income tax was enacted to take money from the "very rich," generally the business moguls, the multi-millionaires of the day. There were numerous legal deductions that went along with the tax. However, as the income tax was increased to the point of capturing the middle class by WW II, the deductions remained. JFK and Reagan both reduced the marginal tax rates on income. JFKs economic expansion was wiped out by spending for the Vietnam War and by the Great Society socialist spending splurge that gave us "stagflation" for 15 years. Reagan ended the "stagflation" by getting the economy roaring by cutting taxes and the Fed by killing inflation. The money that was saved by consumers and business as result was put into business growth and investment. Unfortunately, Congress began to rape the Golden Calf beginning in the late 1980s. That domestic spending splurge began having a detrimental effect on the economy by the end of the decade.