Reagan's Tax Increases

It may come as a surprise to some people that once upon a time in the not-too-distant past Republicans actually cared enough about budget deficits that they thought raising taxes was necessary to bring them down. Today, Republicans believe that deficits are nothing more than something to ignore when they are in power and to bludgeon Democrats with when they are out of power.

Legislated Tax Changes by Ronald Reagan as of 1988

Tax Cuts	Billions of Dollars
Economic Recovery Tax Act of 1981	-264.4
Interest and Dividends Tax Compliance Act of 1983	-1.8
Federal Employees’ Retirement System Act of 1986	-0.2
Tax Reform Act of 1986	-8.9
Total cumulative tax cuts	-275.3

Tax Increases	Billions of Dollars
Tax Equity and Fiscal Responsibility Act of 1982	+57.3
Highway Revenue Act of 1982	+4.9
Social Security Amendments of 1983	+24.6
Railroad Retirement Revenue Act of 1983	+1.2
Deficit Reduction Act of 1984	+25.4
Consolidated Omnibus Budget Reconciliation Act of 1985	+2.9
Omnibus Budget Reconciliation Act of 1985	+2.4
Superfund Amendments and Reauthorization Act of 1986	+0.6
Continuing Resolution for 1987	+2.8
Omnibus Budget Reconciliation Act of 1987	+8.6
Continuing Resolution for 1988	+2.0
Total cumulative tax increases	+132.7

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year 1990 (Washington: U.S. Government Printing Office, 1989), p. 4-4.

source

Cartoon: Tax Cuts and Infrastructure

Total Stimulus: $1 Trillion

With the passage of a $26 billion state aid package Tuesday, Congress has approved over $1 trillion in spending and tax measures to stimulate the economy, according to a recent summary of the legislation by two independent economists. This fiscal stimulus has been just a part of the government's response to the recession, which also includes policies such as TARP, homeowner assistance and initiatives by the Federal Reserve.

source

Obama's "Tax Cuts"

Public opinion is behind tax cuts. In a recent poll, 58% of Americans said they would oppose a new fiscal stimulus program if it did not include tax cuts. While it is natural that Americans should want tax cuts, we should be careful about the methods we choose to achieve that goal...

Perhaps the most disturbing part of this discussion is the failure of so many people to recognize the illusory nature of the Obama tax cuts, which would reduce the immediate tax burden for some Americans by increasing the federal deficit. A switch from tax-financed spending to deficit-financed spending does little to change the existing division of resources between the private and public sector.

Obama's tax cut does not shift resources into the private sector, as a true tax cut would. What Obama is proposing is deferred taxation. He wants to spend now and tax later. The Obama deficits will increase the interest payments by the federal government, draw money in capital markets away from private investment, and ultimately result in higher future tax rates...

Overall, the Obama plan to borrow now and tax later does not stimulate the economy; it just keeps a large part of the economy in the public sector. There is no real tax cut in his proposal. In real economic terms, the alleged tax cuts in Obama's plan keep tax rates the same.

The real cost here stems from government waste...

Government waste is a drain on future economic growth. Lower economic growth is a hidden tax that we all pay. That is, it is a tax that is completely unseen by people who accept the rhetoric of economically illiterate politicians like Barack Obama. Unfortunately, many Americans are ready to be fooled by Obama's mythical tax cuts and fiscal stimulus. While Obama promised change, he is changing nothing with his tax policy.

read the entire essay

My thoughts: Smoke and mirrors. Cut tax rates. Or better yet eliminate the income tax and cut spending to match.

Cartoon: Tax Cuts or Revolution

Tax Rates: Bush v Clinton

great charts and commentary from Carpe Diem

My thoughts: Lower taxes are always good. Let people keep more of what they earn. We can't tax ourselves into prosperity.

What the Rebates Means

Single filers with AGI below $75,000 will get rebates of as much as $600. Couples with AGI below $150,000 will receive rebates of up to $1,200.

In addition, parents will also receive $300 rebates per dependent child; there is no cap on the number of children eligible.

An example: A couple with one child and $100,000 in AGI will get a rebate of $1,500 ($1,200 + $300). If they have two children, they will get $1,800 ($1,200 + $600)...

Do I have to pay the rebate back?

No. And here's why.

Your rebate is a one-time tax cut - an advance on a credit you'll receive on your 2008 return.

It's based on your 2007 income initially. If it turns out that your 2008 income and number of children would have qualified you for a larger rebate than the one you received, you'll be sent the difference. If it turns out your 2008 income was lower than in 2007 and you should have gotten a lower rebate, you get to keep the difference.

read the CNN story

Best advice: invest the money.

Tax Law Changes Equals Increasing Paychecks

For a single person earning $50,000 per year (assume all wages/salaries and no adjustments), his federal individual income tax bill under 2007 tax parameters would be calculated as follows:

AGI = $50,000

Income Tax After Credits for 2007 tax law = $6,736.25

Now for a person earning $50,000 under the 2008 tax parameters:

AGI = $50,000

Income Tax After Credits for 2007 tax law = $6,606.25

The person would save $130 on the year assuming no pay change, which would be about a $5.42 pay increase per pay period (assuming two per month).

source: Tax Foundation


It is not much, but declining tax bills are good. Although I'm not holding my breath.

The Rich Are Paying Taxes

HT: Carpe Diem

Capital Gains Taxes

Taxing capital gains at a lower rate than ordinary income is a long-established policy to encourage risk taking and investment. Since we already tax corporate earnings at 35% through the corporate income tax, taxing those profits again when the stock is sold imposes a double tax on risk capital. That's why 12 industrialized nations, including Hong Kong and Korea, impose a zero capital gains rate.

read the entire article

Republicans: decrease rates to increase revenue
Democrats: increase rates to increase revenue

Me: Why not let people keep their money and have a 0% capital gains tax rate?

Capital Gains: Cut Rates and Increase Revenue