Ronald Reagan - Tax Increaser

[Toro]

No, I'm not talking about when he raised taxes after cutting them. That is well known. And despite Reagan raising taxes after he cut taxes, he is rightly known as a tax-cutting (and deficit-ballooning) President.

But what I didn't know was that he raised taxes as governor of California. I was surprised by this.

Feb. 6, 2011, was the 100th anniversary of the birth of Ronald Reagan and brought forth predictable tributes from conservatives eager to wrap themselves in the mantle of their hero. Many declared Reagan’s 1981 tax cut to have been one of the seminal economic accomplishments in history. I did not see any tributes to Reagan’s legacy as a tax increaser, however, an important part of his legacy that conservatives would like to forget.

Reagan’s record on raising taxes began almost the moment he entered politics. Elected governor of California in 1966, he inherited a large budget deficit from his predecessor, Pat Brown. Although a conservative, dedicated to shrinking government, Reagan nevertheless found the magnitude of spending cuts that would have been necessary in 1967 to be beyond reach. This led him to endorse a $1 billion per year tax increase, equivalent to a $17 billion tax increase today – an enormous sum equal to a third of state revenues at that time. Journalist Lou Cannon recounts the circumstances:

“No amount of budget reductions, even if they had been politically palatable, could have balanced California’s budget in 1967. The cornerstone of Governor Reagan’s economic program was not the ballyhooed budget reductions but a sweeping tax package four times larger than the previous record California tax increase obtained by Governor Brown in 1959. Reagan’s proposal had the distinction of being the largest tax hike ever proposed by any governor in the history of the United States.”[1]

The top income tax rate was raised from 7 percent to 10 percent, the sales tax rate went from 3 percent to 5 percent, the cigarette tax was increased from 3 cents to 10 cents per pack, the alcohol tax was raised from $1.50 to $2 per gallon, the bank and corporate tax rate went up from 5.5 percent to 7 percent, and the inheritance tax rose from a range of 2 percent to 10 percent to a range of 3 percent to 15 percent.[2] According to Cannon, this was essentially the Democrats’ wish list of tax initiatives, with the sole exception that it did not institute tax withholding, which Reagan adamantly opposed. In Cannon’s words, “An economist who analyzed the tax bill without knowing its political background might conclude that it had been crafted by a New Deal Democrat.”[3]

In 1970, Reagan proposed yet another big tax increase of $1.1 billion, which would have been used to finance property tax relief. Incomes above $32,000 would have been subject to a new 11 percent tax rate, and three years later a new 13 percent bracket would have applied to those with incomes above $36,000. The bill would have also instituted tax withholding, which ironically led to its defeat in the Senate by a single vote. However, many of these provisions were enacted the following year.[4] The 1971 legislation raised taxes by $508 million (about $6 billion today), including an increase in the top income tax rate to 11 percent, a rise in the bank and corporate tax rate from 7 percent to 7.6 percent, and institution of an alternative minimum tax and tax withholding.[5] State taxes were raised another $1.1 billion in 1972 (about $12.5 billion today). This legislation included another increase in the sales tax rate from 5 percent to 6 percent and a further rise in the bank and corporate tax rate from 7.6 percent to 9 percent.[6]

Reagan had little to say about these tax increases in his memoirs except to claim that he gave back $5 billion to taxpayers.[7] However, in many cases, the tax relief consisted of tax rebates and one-shot tax cuts.[8] In the end, it is clear that Governor Reagan presided over an astonishing expansion of taxes in California. According to the California Department of Finance, state revenues tripled from $2.9 billion in the 1966/67 fiscal year to $8.6 billion in the 1974/75 fiscal year, Reagan’s last. ...

In the end, Reagan’s tax legacy fits neither the right-wing nor left-wing pigeonholes. Although he cut taxes when he could, he raised them when he had to. That’s something self-styled Reaganites today should remember.

Reagan's Forgotten Tax Record | Capital Gains and Games

So the question that I have, given the deep mythology of Reagan the tax-cutter amongst conservatives, is this post factually wrong? Are there any omissions of tax cuts he instituted that would offset these tax increases that would make this post incorrect?

 

[Trajan]

not surprised, actually, I posted every tax bill he passed in a thread a few weeks ago..one of the Reagan sux threads..

 

[Oddball]

And he failed to cut spending.

He was a massive disappointment.

Point being?

 

[Trajan]

And he failed to cut spending.

He was a massive disappointment.

Point being?

that depends on what you expect bro.

Old saying- beware the righteous man..

my oldsaying? never trust anyone who doesn't have at least, one vice...

 

[Oddball]

Sorry...That dog don't hunt.

Reagan was disappointed in himself for failing to shrink spending....True story.

I'm doubly disappointed.

 

[whitehall]

Ho-hum...another pointless post by desperate lefties. Yeah, gasp, all presidents raise taxes if you examine the bills they sign into law but Reagan was a gift from God compared to the Peanut Farmer and the rabble in the democrat party.

 

[Trajan]

Sorry...That dog don't hunt.

Reagan was disappointed in himself for failing to shrink spending....True story.

my point was I wasn't surprised at toros post, 2 reasons- no one is as ever as good as they are purported to be, or are responsible for or have done half of what 'they' said they have, when they reach semi mythic status.........and I lived thru the man in office.

(Of course measured against his competition, he did well)

I'm doubly disappointed.

so take one disappointment back. keep it for later...

 

[Gunny]

No, I'm not talking about when he raised taxes after cutting them. That is well known. And despite Reagan raising taxes after he cut taxes, he is rightly known as a tax-cutting (and deficit-ballooning) President.

But what I didn't know was that he raised taxes as governor of California. I was surprised by this.

Feb. 6, 2011, was the 100th anniversary of the birth of Ronald Reagan and brought forth predictable tributes from conservatives eager to wrap themselves in the mantle of their hero. Many declared Reagan’s 1981 tax cut to have been one of the seminal economic accomplishments in history. I did not see any tributes to Reagan’s legacy as a tax increaser, however, an important part of his legacy that conservatives would like to forget.

Reagan’s record on raising taxes began almost the moment he entered politics. Elected governor of California in 1966, he inherited a large budget deficit from his predecessor, Pat Brown. Although a conservative, dedicated to shrinking government, Reagan nevertheless found the magnitude of spending cuts that would have been necessary in 1967 to be beyond reach. This led him to endorse a $1 billion per year tax increase, equivalent to a $17 billion tax increase today – an enormous sum equal to a third of state revenues at that time. Journalist Lou Cannon recounts the circumstances:

“No amount of budget reductions, even if they had been politically palatable, could have balanced California’s budget in 1967. The cornerstone of Governor Reagan’s economic program was not the ballyhooed budget reductions but a sweeping tax package four times larger than the previous record California tax increase obtained by Governor Brown in 1959. Reagan’s proposal had the distinction of being the largest tax hike ever proposed by any governor in the history of the United States.”[1]

The top income tax rate was raised from 7 percent to 10 percent, the sales tax rate went from 3 percent to 5 percent, the cigarette tax was increased from 3 cents to 10 cents per pack, the alcohol tax was raised from $1.50 to $2 per gallon, the bank and corporate tax rate went up from 5.5 percent to 7 percent, and the inheritance tax rose from a range of 2 percent to 10 percent to a range of 3 percent to 15 percent.[2] According to Cannon, this was essentially the Democrats’ wish list of tax initiatives, with the sole exception that it did not institute tax withholding, which Reagan adamantly opposed. In Cannon’s words, “An economist who analyzed the tax bill without knowing its political background might conclude that it had been crafted by a New Deal Democrat.”[3]

In 1970, Reagan proposed yet another big tax increase of $1.1 billion, which would have been used to finance property tax relief. Incomes above $32,000 would have been subject to a new 11 percent tax rate, and three years later a new 13 percent bracket would have applied to those with incomes above $36,000. The bill would have also instituted tax withholding, which ironically led to its defeat in the Senate by a single vote. However, many of these provisions were enacted the following year.[4] The 1971 legislation raised taxes by $508 million (about $6 billion today), including an increase in the top income tax rate to 11 percent, a rise in the bank and corporate tax rate from 7 percent to 7.6 percent, and institution of an alternative minimum tax and tax withholding.[5] State taxes were raised another $1.1 billion in 1972 (about $12.5 billion today). This legislation included another increase in the sales tax rate from 5 percent to 6 percent and a further rise in the bank and corporate tax rate from 7.6 percent to 9 percent.[6]

Reagan had little to say about these tax increases in his memoirs except to claim that he gave back $5 billion to taxpayers.[7] However, in many cases, the tax relief consisted of tax rebates and one-shot tax cuts.[8] In the end, it is clear that Governor Reagan presided over an astonishing expansion of taxes in California. According to the California Department of Finance, state revenues tripled from $2.9 billion in the 1966/67 fiscal year to $8.6 billion in the 1974/75 fiscal year, Reagan’s last. ...

In the end, Reagan’s tax legacy fits neither the right-wing nor left-wing pigeonholes. Although he cut taxes when he could, he raised them when he had to. That’s something self-styled Reaganites today should remember.

Reagan's Forgotten Tax Record | Capital Gains and Games

So the question that I have, given the deep mythology of Reagan the tax-cutter amongst conservatives, is this post factually wrong? Are there any omissions of tax cuts he instituted that would offset these tax increases that would make this post incorrect?

How else do you think the social infrastructure can support all those illegals that contribute nothing to it? Last I heard, California's deficit is larger than the rest of the 49 combined.

And it isn't because of people who pay taxes.

 

[Avorysuds]

Why are we still talking about Reagan? Don't we have enough problems in America in 2011?

 

[xsited1]

Reagan used to be a Democrat so it's not surprising.

Here's a great article about Reagan:

<snip>

... Reagan has been a master at engineering an enormous gap between his rhetoric and the reality of his actions. All politicians, of course, have such a gap, but in Reagan it is cosmic, massive, as wide as the Pacific Ocean. His soft-soapy voice appears perfectly sincere as he spouts the rhetoric which he violates day-by-day. He is, after all, an actor, trained to read his lines with brio and sincerity.

The Reagan Phenomenon by Murray N. Rothbard

 

[Oddball]

Why are we still talking about Reagan? Don't we have enough problems in America in 2011?

Polls show that peeps aren't falling for the GEORGE BOOOOOOOOOSH! gambit anymore.

 

[Toro]

I'm not trying to slag Reagan. I thought he was a good President. It just surprised me, that's all.

 

[uscitizen]

One other point as president Reagans actions cut tax rates it actually raised taxes paid by more individuals because he did away with a lot of personal income tax deductions.
Personal unsucured interest.
Income averaging.
Federal Gasoline tax deduction.
And quite a few more.
I started paying additional at tax time for the first time in my life when Reagan cut taxes.

 

[Oddball]

I'm not trying to slag Reagan.

I am.

He failed to rein in spending...He disappointed me.

Bush 41 insulted me.

The "Republican Revolutionaries" kicked me in the nuts.

Until the GOP shows me something, fuckem.

 

[boedicca]

The OP is promoting a false meme.

In sum, Reagan was a net tax cutter.

It's also important to note that the House was under Democratic control throughout Reagan's terms.

 

[BlindBoo]

Ho-hum...another pointless post by desperate lefties. Yeah, gasp, all presidents raise taxes if you examine the bills they sign into law but Reagan was a gift from God compared to the Peanut Farmer and the rabble in the democrat party.

Yeah how great is it that we are more dependent than ever on foriegn sources of energy. How horrible it would be now had Raygun followed up on the hard decisions Carter made to get us off foriegn sources instead of taking the easy road. Cheap oil is the real reason behind the economy's success during the first three years, but then something happen....oh yeah the oil bust of 1983-84.

Yeah a supernatural gift.

 

[Toro]

The OP is promoting a false meme.

Actually, Boed, it talks about his term as governor. I don't think anyone is contending that he was a net tax cutter as President.

I guess the meme of the thread is that Reagan was more practical than generally believed.