No, Ronald Reagan Did Not Raise “Taxes”

Propaganda: Ronald Reagan raised taxes 11 times. He believed you should tax the rich to help the economy. GOP has gone so far to the right even Reagan couldn’t be a Republican today!

FACTS:

  • Ronald Reagan did raise some taxes. But he lowered many more than he raised.
  • Democrats include temporary “use taxes” (fees on gasoline and cigarettes, for example) in the “11 tax increases”.
  • Obama is attempting to raise “income taxes”.
  • Reagan’s “gas tax” increase was a mere 5 cents per gallon. It had not been raised since 1959.
  • Democrats include ending certain tax deductions as “raising taxes”.
  • Both actual tax rates (nominal) and inflation-adjusted tax rates (effective) dropped dramatically under Reagan
  • The top income tax rate dropped from 70% to 28% under Reagan.
  • The Tax Code was also indexed to inflation. This meant taxpayers who did not effectively earn more could no longer be swept into higher tax brackets simply by the rate of inflation.
  • Under Reagan, the net tax burden on the American People dropped significantly.
  • TEFRA is often cited as the main example of Reagan’s pro-tax policy. TEFRA was a Democrat deception (see below).

Democrats offered Reagan a “grand bargain” in 1982: Democrats promised to reduce $3 of spending for every $1 of tax increases. Reagan reluctantly agreed to the tax increase under “The Tax Equity and Fiscal Responsibility Act of 1982” (TEFRA). Once the tax was in place, Democrats promptly refused to cut any spending.

When TEFRA was passed, Reagan described it as “a limited loophole-closing tax increase to raise more than $98.3 billion over three years in return for … agreement to cut spending by $280 billion during the same period.”

Reagan later wrote in his memoirs: “The Democrats reneged on their pledge [to cut spending] and we never got those cuts.” He remained deeply disappointed with TEFRA for the rest of his life.

Democrats used the same ruse on George H.W. Bush in 1990. Bush famously said “Read my lips. No new taxes”. When Democrats offered drastic spending cuts in return for modest tax increases, Bush bit. Again, the spending cuts never happened. The tax increases cost Bush the election.

Democrats offered the House of Representatives GOP Majority the same deal in 2011. The House GOP wisely refused. Progressives then used the GOP refusal as more propaganda: “The Republicans are so beholden to the rich they won’t even take a 10-1 spending cut/tax increase deal!”

Fool me once, shame on you. Fool me twice, shame on me. Fool me for the third time? I don’t think so…

The truth is that tax cuts pay for themselves.

And Ronald Reagan dramatically reduced the tax burden on America.

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