Maximum wage

[jmowreader]

37. Kennedy championed a "perfect storm" tax cut

When Kennedy came into office, the top rate was 90 percent. A very large part of the reason it was that high was Eisenhower's wanting to retaliate against The Rich for profiteering off World War II defense contracts while the men slogging through the mud were earning $37 per month. And y'know, that was kinda petty but he did have a point.

Kennedy's tax plan reduced the 90 percent rate to 70. This did three things:

1) It gave the wealthiest recipients of the tax cut enough savings to do substantial things.
2) It left enough money in Federal hands to do substantial things, like construct the Interstate Highway System and shoot rockets into outer space.
and
3) It hit just before IBM dropped the System/360 mainframe family on a waiting world. Businesses could afford to buy these miracle machines with the money they weren't sending to the government. (There were computers before the S/360, but almost all were leased and very few were in circulation. Utilities and big businesses had them, but smaller businesses were still using manual calculation and filing.)

The Reagan tax cuts were different: they shoved tax revenues to the left side of the Laffer Curve, which caused significant government spending slowdown which hit the private sector (the government buys what it needs from the same place you do, they just buy a lot more of it), and the "breakthrough technology" of the 1980s - the IBM PC - was relatively inexpensive. IBM big iron is a multimillion-dollar investment; a really top-notch PC was the price of a used car. The old trick of "stimulating the economy" with tax cuts doesn't work anymore, because taxes aren't high enough. Cutting the rate by one percent to try to stimulate the economy is like trying to tickle a rhinoceros with a hummingbird feather. We're at the point where the only way we can "stimulate" the economy through government action is to spend a trillion dollars on infrastructure and hope like hell the new roads create new business.