Reagan Tax Cuts Benefit the Poor

Reader comment on: NYT on Reagan's 100th

Submitted by Ed Thompson (United States), Feb 6, 2011 17:43

The Reagan tax cuts are a myth. It conflates tax rates with revenue. Low and middle income wage earners gained. A Cato op-ed partially explains:

Since most of the Reagan tax cuts applied to lower- and middle-income earners, there was close to a dollar lost in tax revenue for each "dollar" of tax cut for these groups. Still, CBO figures show that total tax revenue only fell from 19.2% of gross domestic product (GDP) in 1982, before most of Reagan's tax-rate reductions were put in place, to 18.4% of GDP in 1989, the year he left office. This happened because the U.S. economy grew by more than one-third in real terms (34.3%), much faster than the 24.3% rate expected even by economists within the Reagan administration. Thus, by the time President Reagan left office, the economy was generating more tax revenue at a maximum 28% rate than many on the left forecast it to generate at a maximum 70% rate. The Reagan tax-rate reductions did, in fact, pay for themselves — but it took about seven years.

http://www.cato.org/pub_display.php?pub_id=12172

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