Small WI - Less Extreme Tax Cuts in 1926

[John Fredrick Parker]

OTL, the 1926 Tax Code lowered the top tax rate (for those making $500,000 or more) from 46% to 26%. Supposing, with the previous cuts (1921-24) being unaffected, this change hadn't been made or wasn't so drastic? I don't think the US goverment would have to be particularly progressive for this to happen; it could have been instead of lowering the top tax bracket from $500,000 to $100,000, the new revenue act could have given the same level of tax cuts for people making just over $100,000, and the same for those making less, but then adding tax brackets on top of $500,000 such that 40% surtax remains the top rate, if only for millionaires.

Now, it is quite possible that this is a very small change, and not very consequential at all; is this the case?Alternatively, might it have reduced the level at which economic growth in the last decades of the boom as concentrated? Or at least have left more revenue already in place for New Deal-like programs?

 

[Grand Admiral Thrawn]

OTL, the 1926 Tax Code lowered the top tax rate (for those making $500,000 or more) from 46% to 26%. Supposing, with the previous cuts (1921-24) being unaffected, this change hadn't been made or wasn't so drastic? I don't think the US goverment would have to be particularly progressive for this to happen; it could have been instead of lowering the top tax bracket from $500,000 to $100,000, the new revenue act could have given the same level of tax cuts for people making just over $100,000, and the same for those making less, but then adding tax brackets on top of $500,000 such that 40% surtax remains the top rate, if only for millionaires.

Now, it is quite possible that this is a very small change, and not very consequential at all; is this the case?Alternatively, might it have reduced the level at which economic growth in the last decades of the boom as concentrated? Or at least have left more revenue already in place for New Deal-like programs?

I don't know much, but although it's intriguing, I don't see it having much impact. Didn't Mellon, US Secretary of Treasury for most of the 1920's not pay income taxes? Can't spend what you can't get. My limited understanding is that having no real restrictions on buying stock with debt (on margin, in case different) was a bigger problem, since many went broke, so the banks went broke, and (contrasted with Canada, who allowed interstate banks) since US banks were pretty much in 1 state only, got hammered and collapsed. Throw in agricultural farms across the world never really adjusting to the artificial increase from World War 1 and then the slump afterwards, boll weevils, and the Smoot Tariff ruining international trade... Sorry, not trying to belittle you, actually just stream of conscious posting. Hey, at least I'm not Family Guy and have a cheap cutaway as a gag. And since the mess started in Oct 1929 for the Crash (not sure how long till unemployment increased), but FDR doesn't get in until March 1932, any revenue raised will be spent already- pretty sure FDR actually campaigned against Hoover as a fiscal conservative, but not surprised if I am wrong. Basically, Hoover did try federal programs, but with the Federal Reserve cutting how much money was in the economy, a few millions more doesn't seem like it will make a difference. Sorry, it's an intriguing idea, and I've lurked hoping someone would know more.