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Tag Archives: Reagan tax increases

Reagan raised taxes on corporations

The conservatives of today live in a fantasy world, claiming to be Christian while genuflecting before icons of their chosen Messiah, Ronald Wilson Reagan; all have this vision of the Gipper with his tax cutting sword Excalibur flying through the halls of Congress slashing taxes and blessing the land with myriad tax cuts – reality check, while Reagan cut taxes his first year in office, it soon became clear his doctrine of supply side, trickledown economics was voodoo and that it wasn’t working, hence, for almost every year thereafter he raised one tax or another. It wasn’t the tax cuts that fed the government coffers, and fueled the start of economic recovery, it was the tax increases.

One such tax increase was in 1986, when on the south lawn of the White House under a beautiful sunny fall morning, Cabinet members, leading lawmakers and a large crowd applauded as they witnessed President Reagan sign into law the Tax Reform Act.

In order to get to this momentous bill signing, the President had to go to Capitol Hill to knock more than a few fellow Republicans heads together; all members of the House who had earlier blocked the measure – sound familiar?

“I think all of us here today know what a herculean effort it took to get this landmark bill to my desk,” Reagan said to the assembled crowd.

The Tax Reform Act of 1986 took the largest share of the country’s tax burden off the shoulders of the “really poor” whom Willard Mittens Romney “doesn’t worry about” and the middle class and placed it squarely on the corporations; it exempted millions of households of the “really poor” from any federal income taxes. Reagan called it “a sweeping victory for fairness” where “vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.” The act was designed to be tax revenue neutral, because individual taxes were decreased while $30 billion annually in loopholes were eliminated and corporate taxes were increased

According to National Public Radio (NPR) it took more than two years to produce that tax code overhaul, and during that time, President Reagan went on the road to plead his case for the plan. At a high school in Atlanta, Ga., in 1985, Reagan said they were going to “close the unproductive loopholes that allow some of the truly wealthy to avoid paying their fair share.”

In Congress, Democrats and Republicans worked together to merge competing proposals for tax reform, and some like Democratic Senator Patrick Leahy of Vermont says it was a different era.

“We had a lot of grownups in both parties, people who actually wanted the government to work,” Leahy says.

Yes you did Senator; you had what the current crop of Republican Tea Party (GOTP) members’ lack, maturity. The GOTP thinks it’s slick in portraying the uber-rich as the victims of the tax code; a code which allows a multi-millionaire to hide his money in the Caymans and in Swiss bank accounts and pay a mere 13% in taxes. The GOTP needs to read its own history, and see what its hero saw, that the rich don’t suffer under some stifling tax burden, that the economy isn’t struggling because the rich pay too much, but because they pay too little while everyone else carries the load. Reagan’s signature leveled the playing field while George W. Bush made it catawampus, tilting wildly in favor of those who didn’t need help. Reality check, Willard Mittens Romney, and his class – the deified  1% aren’t paying its fair share, they’re paying nowhere close to it and Mitten’s current tax proposal will decrease the current tax levels on his group to zero while raising taxes 60% on the middle class and poor. I had the very great privilege to work for and to know Ronald Reagan, and Mittens is no Ronald Reagan.

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Posted by on February 2, 2012 in 2012 Election

 

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On taxes, Reagan and Obama would be tight …

Isn’t it interesting that the same Arthur (aka Art) Laffer, the former Reagan economic underling, who is now making a splash on FOX PAC interviews crying “TAX CUTS FOR ALL, TAX CUTS FOR ALL!” wrote in June 2004 – for the Heritage Foundation no less – that as a result of the Economic Recovery Tax Act of 1981 (ERTA) and other tax acts (meaning increases) in the 1980s, the top 10% were paying 57.2% of total income taxes by 1988 – up from 48% in 1981 … Why, that looks like a tax increase on the top tax bracket under Ronald Reagan, creating more tax revenue and stimulating the economy … and wow, President Obama has proposed increasing taxes on the top echelon of earners just like Reagan did to create more tax revenue and to help stimulate the economy, and yes Virginia, that would mean not only that there is a Santa Clause, but that the rich would be paying a higher percentage of total income taxes.

Additionally, a report from the Joint Economic Committee in 1996 found that the bottom 50% of earners share dropped from 7.5% to 5.7% from 1981 to 1988, and that the total share of taxes on middle income earners in the 50th to 95th percentile decreased from 57.5% to 48.7% between 1981 and 1988 … now that’s just amazing, the President’s jobs bill would reduce payroll taxes on both workers and employers, extend long-term unemployment benefits and invest in public works and teachers, police officers and other public servants – in effect reducing the tax burden of the lower and middle class, gee, just like Reagan did.

So, just to recap, from 1981 to 1988 we see an increase on taxes during Reagan’s presidency on the upper percent of earners (the top 5% to be exact) aka the fabulously wealthy so-called job creators, while at the same time tax rates were cut for the middle class and lower income classes and the economy grew right along with tax revenues helping the country out of a devastating economy … curse those darned facts!

 
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Posted by on October 6, 2011 in 2012 Election

 

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Reagan was not a tax cutter, he was a tax raiser?

With all the uber-conservative positioning on the debt ceiling and cries for standing true to the Reagan legacy of not raising taxes on the rich – oops, I mean the “job creators” – and only cutting taxes, I thought it would be a good idea to revisit the truth about Ronald Reagan’s “revolutionary” tax cuts; first, yes Virginia, there is a Santa Claus, and yes Ronald Reagan did cut taxes; sort of. However, these wonderful, growth expanding, job creating, economic exploding tax cuts never fully took effect. You see, they were scaled back in 1982 by a tax increase averaging some $37.5 billion over its first four years.

Second, part of the Reagan tax cut myth is that everyone “never had it so good” as they did under Reagan. Well, again sort of; however, the economy actually grew slightly faster under President Clinton, and, according to Congressional Budget Office estimates, the after-tax income of a typical family – adjusted for inflation – rose more than twice as much from 1992 to 2000 as it did from 1980 to 1988.

While President Reagan rammed a huge 1981 tax cut through a Democrat controlled Congress, he had to follow it with two large tax increases. Fact of the matter is no peacetime president has ever raised taxes so much on so many people. Yes, you heard that right; NO PEACETIME PRESIDENT HAS RAISED TAXES SO MUCH ON SO MANY PEOPLE!

The first two Reagan tax increases came in 1982. That year, he signed into law the Tax Equity and Fiscal Responsibility Act which raised taxes by $37.5 billion per year, and the Highway Revenue Act of 1982 which raised the gasoline tax by another $3.3 billion. These increases, coming only a year after his “monumental” tax cut were needed because the budget projections used to justify the 1981 tax cut were outrageously over optimistic. Over all, the 1982 tax increases undid about a third of the 1981 cut; and truth be told, as a share of the Gross Domestic Product, the increase was substantially larger than Mr. Clinton’s 1993 tax increase. In fact, according to the United States Treasury Department, TEFRA alone raised taxes by almost 1% of the G.D.P., making it the largest peacetime tax increase in American history. Listen carefully ditto-heads, because I want you to remember, Ronald Reagan oversaw the “LARGEST PEACETIME TAX INCREASE IN AMERICAN HISTORY”.

President Reagan’s next tax increase was known as the Social Security Reform Act of 1983. Its key provision was an increase in the payroll tax that pays for Social Security and Medicare hospital insurance. For many middle- and low-income families, this tax increase more than undid any gains from Reagan’s income tax cuts of 1981. This is a tax increase that lives on, because it initiated automatic increases in the taxable wage base. Thanks to President Reagan, those with moderately high earnings see their payroll taxes rise every single year. Once again ditto-heads, thanks to whom? Come on, you can say it, thanks to Ronald Reagan.

According to 1980 Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 % in payroll taxes. By 1988 the income tax share was down to 6.6 %  — but the payroll tax share was up to 11.8 %. The increase in the payroll tax share outweighed, or canceled out, any benefit from lowering of the income tax share paid.

But wait! We’re not done! The following year, Reagan signed another big tax increase in the Deficit Reduction Act of 1984. This raised taxes by $18 billion per year or 0.4 % of G.D.P. A similar sized tax increase today would be about $44 billion

OK, now wait just a darned minute! Reagan passed the historic Tax Reform Act of 1986, achieving in startling clarity his supply side goal of lowering individual income tax rates; well, not quite. The “historic Tax Reform Act of 1986 in reality imposed the largest corporate tax increase in history. OK “ditto-heads”, repeat after me, “THE LARGEST CORPORATE TAX INCREASE IN HISTORY”.

With the simple stroke of his pen, Reagan raised corporate taxes by $120 billion over five years and closed corporate tax loopholes worth about $300 billion over that same period.

So, what does it all mean?

It means tax cuts during a recession do not work. They didn’t work for Ronald Reagan in 1981, and they certainly didn’t work for George W. Bush in 2001. Tax cuts during a recession coupled with increased federal spending really do not work. Reagan cut taxes and increased federal spending in order to fight, and win, the cold war. George W. Bush cut taxes and increased federal spending to fight the war on terror, and to fund his invasion and occupation of Iraq.

So, what are the differences between Reagan and Bush? Reagan understood his tax cuts were hurting the economy, and did a 180 turn and increased taxes – in spite of what Rush, Hannity, et al claim – while George W. Bush plowed straight ahead off the cliff.

Did Ronald Reagan cut taxes? Yes he did. But then he raised them. Two things to remember about the Gipper and his tax cuts:

First, Ronald Reagan oversaw the largest peacetime tax increase in American history.

Second, Ronald Reagan imposed the largest corporate tax increase in history.

 
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Posted by on July 19, 2011 in Federal Budget

 

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