Looking back at Reagan’s tax hikes
If you’re a conservative and you followed the rhetoric over President Barack Obama’s push to raise taxes, then you know that he liked to invoke Ronald Reagan’s name whenever possible. Obama said that Reagan was willing to raise taxes on the rich and compromised on tax hikes nearly a dozen times.
Those of us that look up to Reagan know his record. Over the course of his two-terms in office, Reagan, who was well versed in the works of F.A. Hayek and other free market economists, cut the top marginal tax rate from 70% to 28% and taxpayers saw a net-tax cut. Unfortunately, Reagan did sign several tax hikes into law, though they’re not what many make them out to be, Matt Lewis explains:
[T]he notion that Reagan was a tax-hiker has persisted. In recent years, Republicans ranging from former Sen. Alan Simpson to Reagan aide Bruce Bartlett have been cited noting that Reagan raised taxes (he did.) But their statements are often taken out of context — as if to muddy the waters — to make it appear that Reagan was a fan of tax hikes.
The typical tactic is to say Reagan raised taxes 11 or 12 times (the exact number depends on whom you ask.) But it’s unhelpful — in fact, it’s a bit misleading — to talk about how many times Reagan raised taxes. That’s because (as noted earlier) tax increases are not created equal. Some are much worse than others. And many of Reagan’s so-called “tax increases” were actually examples of ending deductions.
Overall, Reagan dramatically cut the most odious of taxes.
So, for those who care about the truth, here are some details. One of the tax increases Reagan signed (the Highway Revenue Act of 1982) was a temporary increase in the federal gas tax from 4 to 9 cents. (This could be thought of as a sort of “user fee,” inasmuch as the revenue generally went to roads and infrastructure.) Another was a cigarette tax (Consolidated Omnibus Budget Reconciliation Act of 1985.) These are real tax increases, but should not be confused with the income tax.
Let’s also not forget that many, if not all, of these tax hikes were compromises with Democrats in Congress. There were supposed to be spending cuts in those deals, but unsurprisingly they never panned out. Reagan wasn’t perfect. He allowed defense spending to soar out of control, though he managed to cut non-defense discretionary spending by 13%. This is the opposite of President Obama, who has allowed spending to increase by more than 25%.
Reagan’s presidency is a topic that I want to write more about. There are a lot of distortions and myths that come from the Left about what he did in office, but there isn’t much fact or it’s taken entirely out of context. Reagan may not have been the best president we ever had, but he probably understood economics and business the best. These basics are lost on Obama, who often uses them as rhetoric punchlines rather than doing what is in the best interest of the economy.