Reagan raised taxes

Team Obama obviously doesn't need the advice of an anonymous Milwaukee blogger. But I'm paying for this site, so I'll throw it out there anyway. And it's this: When facing a battle over raising taxes suggest that Ronald Reagan would approve.

Something like this:

"No one likes taxes and no one likes to raise taxes. But sometimes we have to do things we don't like to do. Think about it: Ronald Reagan was dead-set opposed to raising taxes. But when he saw the deficits spiraling out of control, what did he do? He looked beyond ideology and raised taxes. When he saw that Social Security needed to be fixed, what did he do? He raised payroll taxes. He raised the corporate tax. He increased taxes on investments. He wasn't blinded by ideology like some of the people who purport to carry his mantle today. Ronald Reagan raised taxes in six of the eight years he was in office. And we're not going that far. The tax proposals contained in this bill are small compared to the ones that Ronald Reagan implemented and they are more equitable and do not --as the Reagan tax increases did -- punish the middle class."

The notion that Reagan cut taxes and revenues soared and the economy boomed is the foundational myth of modern conservatism. Chip at that and you further weaken the edifice, weak as it already is. The Brawler suspects that many of the younger GOP flacks are wholly ignorant of St. Ronnie's tax-raising ways. And just getting Republicans to say "Reagan's tax increases were better ..." means they've lost. (And if they blame the Democratic congress, helpfully remind them that the Senate was in Republican hands for six of Reagan's eight years in office.)

How big a taxer was Ronald Reagan? Via The Daily Howler, a 2003 overview by conservative  economist Bruce Bartlett:

Reagan may have resisted calls for tax increases, but he ultimately supported them. In 1982 alone, he signed into law not one but two major tax increases. The Tax Equity and Fiscal Responsibility Act raised taxes by $37.5 billion per year, and the Highway Revenue Act of 1982 raised the gasoline tax by another $3.3 billion.

According to a recent Treasury Department study, TEFRA alone raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history. An increase of similar magnitude today would raise more than $100 billion per year.

In 1983, Reagan signed legislation raising the Social Security tax rate. This is a tax increase that lives with us still, since it initiated automatic increases in the taxable wage base. As a consequence, those with moderately high earnings see their payroll taxes rise every single year.

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 percent of GDP. A similar sized tax increase today would be about $44 billion.

The Consolidated Omnibus Budget Reconciliation Act of 1985 raised taxes yet again. Even the Tax Reform Act of 1986, which was designed to be revenue-neutral, contained a net tax increase in its first two years. And the Omnibus Budget Reconciliation Act of 1987 raised taxes still more.

The year 1988 appears to be the only year of the Reagan presidency, other than the first, in which taxes were not raised legislatively. Of course, previous tax increases remained in effect. According to a table in the 1990 budget, the net effect of all these tax increases was to raise taxes by $164 billion in 1992, or 2.6 percent of GDP. This is equivalent to almost $300 billion in today’s economy.

And while Republicans cry crocodile tears that the Obama's iron fist of taxation will ultimately smash the middle class -- Reagan did that too! Krugman (again via Daily Howler):

KRUGMAN: 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.

For those who don’t want to do the math, Krugman’s “middle-income families with children” were paying a combined burden of 18.4 percent by 1988, up from 17.7 percent in 1980. For these middle-class families, Reagan—who did reduce taxes overall—had actually raised their tax burden.

Just in: It's also worth noting that in 1986 Reagan dramatically expanded the earned income tax credit -- tax policy that current Republicans would denounce as "welfare."

Comments

[DR]

St Reagan is a myth made up to forget Nixon.