21 June 2012 0 Comments

A Short History of Recent Tax Cuts: Remembering the 1997 Clinton Tax Cuts

ClintonTax Cuts: In 1997 President Bill Clinton signed a tax cut bill that, among other things, created a new $500 child tax credit, raised the income limit for deductible IRAs, nearly doubled the estate tax exemption, and slashed the capital gains tax rate by a whopping 28%.  The reduction in the capital gains tax was especially helpful.  In 1995, just over $8 billion in venture capital was invested. By 1998, the first full year in which the lower capital gains rates were in effect, venture capital activity reached almost $28 billion, more than a three-fold increase over 1995 levels, and it doubled again in 1999.  At the same time, total federal revenue rose every year after the 1997 tax cuts

The economy averaged 4.2 percent real growth per year from 1997 to 2000–a full percentage point higher than during the expansion following the 1993 tax hike. Employment increased by another 11.5 million jobs, which is roughly comparable to the job growth in the preceding four-year period. Real wages, however, grew at 6.5 percent, which is much stronger than the 0.8 percent growth of the preceding period (illustrated in the graph below). Finally, total market capitalization of the S&P 500 rose an astounding 95 percent

In summary, coming out of a recession into a period when the economy should grow relatively rapidly, President Clinton signed a major tax increase. The average growth rate over his first term was a solid 3.2 percent. In 1997, at a time when the expansion was well along and economic growth should have slowed, Congress passed a modest net tax cut. The economy grew by a full percentage point-per-year faster over his second term than over Clinton’s first term. (http://www.heritage.org/Research/Reports/2008/03/Tax-Cuts-Not-the-Clinton-Tax-Hike-Produced-the-1990s-Boo

READ MORE The Facts About Tax Cuts, Revenue, and Growth Michael T. Griffith 2010 @All Rights Reserved Third Edition

 

.  He also holds an Advanced Certificate of Civil War Studies and a Certificate of Civil War Studies from Carroll College.  He is a graduate in Arabic and Hebrew of the Defense Language Institute in Monterey, California, and of the U.S. Air Force Technical Training School in San Angelo, Texas.  In addition, he has completed Advanced Hebrew programs at Haifa University in Israel and at the Spiro Institute in London, England.  He is the author of five books on Mormonism and one book on the JFK assassination.  His books on Mormonism include How Firm A Foundation, A Ready Reply, and One Lord, One Faith.

 

 

 

 


 

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