NEW YORK (CNNMoney.com) - Those who oppose higher taxes and are fed up with record levels of U.S. debt may pine for Ronald Reagan, the patron saint of lower taxes and smaller government.
But it's worth considering just what Reagan did - and didn't do - as lawmakers grapple with many of the same issues that their 1980s counterparts faced: a deep recession, high deficits and a rip-roaring political divide over taxes.
Soon after taking office in 1981, Reagan signed into law one of the largest tax cuts in the postwar period.
That legislation - phased in over three years - pushed through a 23% across-the-board cut of individual income tax rates. It also called for tax brackets, the standard deduction and personal exemptions to be adjusted for inflation starting in 1984. That would reduce "bracket creep" since the high inflation of the 1970s and early 1980s meant incomes rose very fast, pushing taxpayers into ever higher brackets even though the real value of their income hadn't changed.
The 1981 bill also made certain business deductions more generous.
In 1986, Reagan lowered individual income tax rates again, this time in landmark tax reform legislation.
As a result of the 1981 and 1986 bills, the top income tax rate was slashed from 70% to 28%.
Despite the aggressive tax cutting, Reagan couldn't ignore the budget deficit, which was burgeoning.
After Reagan's first year in office, the annual deficit was 2.6% of gross domestic product. But it hit a high of 6% in 1983, stayed in the 5% range for the next three years, and fell to 3.1% by 1988. (By comparison, this year it's projected to be 9% but is expected to drop considerably thereafter.)
So, despite his public opposition to higher taxes, Reagan ended up signing off on several measures intended to raise more revenue.
"Reagan was certainly a tax cutter legislatively, emotionally and ideologically. But for a variety of political reasons, it was hard for him to ignore the cost of his tax cuts, " said tax historian Joseph Thorndike.
Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime, " Thorndike said.
The bills didn't raise more revenue by hiking individual income tax rates though. Instead they did it largely through making it tougher to evade taxes, and through "base broadening" - that is, reducing various federal tax breaks and closing tax loopholes.
For instance, more asset sales became taxable and tax-advantaged contributions and benefits under pension plans were further limited.
"What people forget about Ronald Reagan was that he very much converted to base broadening as a means of reducing deficits and as a means of tax reform, " said Eugene Steuerle, an Institute Fellow at the Urban Institute who had helped lay the groundwork for tax reform in 1986 and served as a deputy assistant Treasury secretary during Reagan's second term.social venture networks social networks ads social networks in organizations social networks uses social networks blur the line between business and personal life. social networks in the world social networks topics why libraries use social media networks list of business social networks social networks and health diabetes social networks in general, the largest social networks include people who are social networks jobs security of personal data in social networks poetry social networks while using social networks as part of the hiring process, employers can how does social support relate to the concept of social networks? other social networks xxx social networks social networks in internet social networks privacy social networks books unique social networks europe social networks vampire social networks social networks blog social networks advertising social networks trend new york social networks business social networks wiccan social networks future of social networks social networks that pay you uses of social networks when it comes to inequality, our social networks visualizing social networks social networks can be classified based on (1) __________ and (2) __________. social networks wiki types of social networks sites world wide social networks social networks documentary best social media networks native american social networks the power of social networks social networks for pictures social networks and our young generation persuasive speech what is social networks social networks for photographers how do groups and social networks differ social network analysis and the evaluation of leadership networks alternative social networks social networks blur the line between business and personal life. teenage social networks app post to all social networks social networks design
You might also like
Ronald Reagan, American Icon | Epic Conservative 'Merica Freedom Unisex T-shirt-Adult,XL