Posted by: Rational Voice | October 5, 2011

Reagan Would Support the Buffet Rule?

Oh this pisses me off.  Way to pick and choose your facts.

Taxes were actually lower because the top marginal rate under Reagan eventually got down to 28%.  True, he did increase some taxes but those were in order to get lower rates elsewhere.  And while Reagan may have said that, it wasn’t anything like this guy makes it out to be. Rather, Reagan wanted to cut the loopholes to make the system simpler and more efficient, a system that would bring in more revenue and broaden the overall tax base while allowing each person to pay lower rates.  He didn’t want to do it to make sure the rich “pay their fair share.”  He realized that by allowing people to keep their own money, they could invest in themselves and achieve a higher marginal benefit from it than they could ever get by giving it to the government. While it is true, he did increase payroll taxes as a start to Social Security reform.  He raised some others as a start towards deficit reduction because he was promised $3 in cuts for every $1 in increase, but the cuts never came because they never do. He learned his lesson after that and refused to support such ideas. He did increase capital gains taxes but that was so he could lower marginal income tax rates.  Reagan had his heart in the right place but the economic reality hurt his ideas here as revenue from capital gains taxes actually dropped significantly.  Overall revenue probably increased from the income tax cuts (don’t have the numbers) but just think, if one tax cut actually increased revenue, just imagine what two could have done!  Just look at what the Wall Street Journal had to say on this:

The 1986 experience was not a happy one. Tax revenues from capital gains surged before the increase took effect in 1987, as investors moved to cash in at the lower rate. Revenues then plummeted. Total realized capital gains didn’t again reach their 1985 level of $172 billion until 1996. By 1992, the federal government was barely getting more in revenue ($29 billion) at the 28% rate than it did in 1985 ($26.5 billion) at the 20% rate.

Rate reductions, as in 2003 when Republicans cut the rate to 15% from 20%, have typically had the opposite effect. Treasury receipts from capital gains climbed to an estimated $117.8 billion in 2006 from $49 billion in 2002.

Everything this guy says is absolute spin which absolutely distorts reality.  It all sounds good and that’s all he is, sound bites.  You look into it more and you realize everything is so misrepresented it borders on being nothing but lies.


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