Bill Clinton’s Tax Increases Slowed Growth
Posted by FactReal on September 5, 2012
|Liberals love to re-write history. When it comes to Bill Clinton, they want Americans to think that his policies resulted in the economic boom of the 1990s. But Clinton increased taxes in 1993 which actually slowed the economy.
The economic growth occurred after the Republican-led Congress passed a tax-relief and deficit-reduction bill in 1997. Clinton initially opposed the bill but later signed it after much pressure.
|Via Heritage Foundation:
President Obama argues that President Clinton’s economic record is proof that the current economy would grow if Congress passed the tax hikes he has long proposed. The American public should not fall for this misleading argument.
The historical record is clear: The economy grew slower than it should have in the years after Clinton’s 1993 tax hike. The strong economic growth that is associated with his presidency occurred only after he agreed with Congress to cut taxes in his second term. […]
Clinton signed his tax hike into law in September 1993, the same year he took office. It included an increase of the top marginal tax rate from 31 percent to 39.6 percent; repeal of the cap on the 2.9 percent Medicare tax, applying it to every dollar of income instead of capping it to levels of income like the Social Security tax; a 4.3 cent increase in the gas tax; an increase in the taxable portion of Social Security benefits; and a hike of the corporate income tax rate from 34 percent to 35 percent, among other tax increases. […]
It was not until after a 1997 tax cut, passed by [the Republican-led] Congress — a tax cut President Clinton resisted but ultimately signed—that the spectacular growth kicked in. While small in static revenue impact, the 1997 cuts included a reduction of the capital gains rate from 28 percent to 20 percent. This opened the capital floodgates necessary for entrepreneurs to develop, harness, and bring to market the wonders of the new information technologies.
Business investment skyrocketed after the tax cut, and the economy grew at an annualized rate of 4.4 percent — 33 percent faster than after the Clinton tax hike—from 1997 through the end of the Clinton presidency. Real wages reversed their downward trend and grew 1.7 percent per year during the same time.