
Originally Posted by
Blome
I didn't really want to go this in depth into in this thread cause it's completely off topic, but tangents are kinda fun. You're both right, "revenue neutral" isn't the correct phraseology. I should have said tax burdens remained constant.
You have to look at his budget for the entire 8 years of his presidency. The first thing you have to look at was his overall taxes and outlays. When Jimmy Carter left office taxes were $517.2b and outlays were $591b for a deficit of $73.8b. After Reagans 8 years, taxes amounted to $909b and outlays were $1064t for a deficit of $155b (an increase of 110%). Right off the bat you have a huge tax increase which comes due either through direct taxation or through inflation. The insidiousness of inflation is that you'll be hit twice. Once through depreciation of the dollar and once through a higher tax bracket. Some defended the deficits as necessary for military spending, but whether or not they were is superfluous because spending is spending. And, yes, domestic spending dramatically increased as well. Now, even if you don't consider these tax raises and for the now I won't, Reagan still raised taxes several times throughout his presidency, which served to almost negate his original tax cuts.
Further, if you look at taxes as a percentage of GNP there's not much difference from Carters last day to Reagans last in office. When Carter left office taxes were 18.9% of GNP when Reagan left it was 18.3%. Not a huge difference especially when you consider future tax burdens.
When he first came into office he slashed the top marginal tax bracket from 70 to 28 percent. He introduced the Economic recovery act that was supposed to cut government revenues by about $750b. However, this was largely offset (the tax cut was still larger than the increase) in 1983 by a huge increase in Social Security taxes. Although, for some reason people don't consider this a tax, but an "insurance" and this was at a time Reagan could have ended social security altogether. In 1982 Reagan gave us the largest tax hike in history up to that point with the passing of the Tax Equity and Fiscal Responsibility Act of 1982. Further, fees were placed on gas, cigarettes and truckers.
This was followed by the Deficit Reduction Act, which was meant to bring in about $50b. Of course, in 1986 the Tax Reform Act not only increased corporate taxes, but closed many loopholes on corporate taxes. The reduction of loopholes also affected about 40% of middle income earners.
In total the $1.48T tax cut that Reagan enacted was offset by the $1.5T in increased taxes, fees, loophole closing, and bracket creep.