Marginal Revolution says that tax rates and government spending rose during the Great Depression. Net result… Great Depression.
Unstimulating
Oddly, in a relevant blast from the past, the stimulus for that depression extending tax increase wasn’t a desire to improve the general welfare as much as punitive for success:
The Revenue Act of 1932 was followed by many further tax increases (e.g. Brown notes "…social security taxes began in 1937 to exert a pronounced effect…") many of them, under pressure from the Huey Long wing, designed to "Share our Wealth."
Hmmm… “Share the Wealth”. I’ve heard that recently from somebody.
And there are actually people who think history doesn’t repeat.
Some say that yesterday’s high rates mean today’s proposed 45% rate is “not that bad”. Of course, that ignores that NOBODY paid those rates. They hid the money in loopholes and other tax avoidance mechanisms. With those gone and the government computers watching every transaction, you can’t hide from the rates. 40% effectively means 45% now. Back in the day 90% meant… nothing.