Originally posted by dmadman43
Do we all want to go back to a top tax rate of 70%? Reagan dropped it to 28%. It's now back up to 35% thanks to....anyone? anyone? (boy, those were the days! I'd love to be paying 28% rather than the 35% I pay now). And Reagan's own advisors wanted him to pull back on the cuts. Thankfully, he didn't. Gotta love a President that does what he promises.
I'm on a mission against revisionist history...Reagan did raise taxes. In fact, he was responsible for the largest peacetime inflation-adjusted tax increase in US history. I admire him for adjusting his policy when the initial tax cuts caused soaring deficits. Taxes are the price we pay to live in a civilized society.
Following is an except from today's NY Times column by Paul Krugman, who's a professor of economics at Princeton. You don't have to agree with Krugman's politics to agree with the facts he lays out about what happened with taxes while Reagan was president:
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But Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts. To his credit, he was more pragmatic and responsible than that; he followed his huge 1981 tax cut with two large tax increases. In fact, no peacetime president has raised taxes so much on so many people. This is not a criticism: the tale of those increases tells you a lot about what was right with President Reagan's leadership, and what's wrong with the leadership of George W. Bush.
The first Reagan tax increase came in 1982. By then it was clear that the budget projections used to justify the 1981 tax cut were wildly optimistic. In response, Mr. Reagan agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. Over all, the 1982 tax increase undid about a third of the 1981 cut; as a share of G.D.P., the increase was substantially larger than Mr. Clinton's 1993 tax increase.
The contrast with President Bush is obvious. President Reagan, confronted with evidence that his tax cuts were fiscally irresponsible, changed course. President Bush, confronted with similar evidence, has pushed for even more tax cuts.
Mr. Reagan's second tax increase was also motivated by a sense of responsibility or at least that's the way it seemed at the time. I'm referring to the Social Security Reform Act of 1983, which followed the recommendations of a commission led by Alan Greenspan. 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 Mr. Reagan's income tax cuts. In 1980, according to Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 percent in payroll taxes. By 1988 the income tax share was down to 6.6 percent but the payroll tax share was up to 11.8 percent, and the combined burden was up, not down.
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