Forum Post: Proof that it was Drops in the Capital Gains Tax Rate that Began both the Great Depression and our Current Great Recession

A few days ago I posted a link to an article outlining a drop in top marginal taxes as the cause for our current economic troubles. Since then I have dug into further research and found that specifically, drops in capital gains tax have preceded nearly every spike in wealth inequality this country has ever seen. It’s also the catalyst that started the sequence of events leading into both the Great Depression and the Great Recession.

As an example, just look at the similarities between these timelines:

• 1921 – Top capital gains tax rate drops to 12.5% (Revenue Act of 1921)

• 2003 – Top capital gains tax rate drops to 15% (Jobs and Growth Tax Relief Reconciliation Act of 2003)

• 1921 to 1928 – Average income for the top 0.01% spiked to 892 times the average income of the bottom 90%

• 2003 to 2006 – Average income for the top 0.01% spiked to 976 times the average income of the bottom 90%

• 1928 to 1933 – U.S. home values decrease by 25.9 percent

• 2006 to 2010 – U.S. home values decrease by 26 percent

• October 1929 – Stock market crash of 1929 (Black Tuesday)

• October 2008 – Stock market crash of 2008

• 1930 to 1932 – U.S. averages 1,700 bank failures per year peaking to over 4,000 bank failures in 1933 (Source)

• 2008 – U.S. Government allocates $700 billion to bailout distressed and failing financial institutions (Emergency Economic Stabilization Act of 2008)

Here’s the updated article: http://www.brianrogel.com/the-100-percent-solution-for-the-99-percent

Wealth inequality is a major problem, but it’s what caused that problem that needs to be fixed.