Roll Back the Reagan Tax Cuts

by Thom Hartmann

Our bridges are falling apart (among other things), and its Ronald Reagan’s fault.

After the Republican Great Depression, FDR put this nation back to work, in part by raising taxes on income above $3 to $4 million a year (in today’s dollars) to 91 percent, and corporate taxes to over 50% of profits. The revenue from those income taxes built dams, roads, bridges, sewers, water systems, schools, hospitals, train stations, railways, an interstate highway system, and airports. It educated a generation returning from World War II. It acted as a cap on the rare but occasional obsessively greedy person taking so much out of the economy that it impoverished the rest of us.

Through the 1950s, though, more and more loopholes for the rich were built into the tax code, so much so that JFK observed in his second debate with Richard Nixon that dropping the top tax rate to 70% but tightening up the loopholes would actually be a tax increase.

JFK pushed through that tax increase to take us back toward FDR/Truman/Eisenhower revenue levels, and we continued to build infrastructure in the US, and even put men on the moon. Health care and college were cheap and widely available. Working people could raise a family and have security in their old age. Every billion dollars (a half-week in Iraq) invested in infrastructure in America created 47,000 good-paying jobs as Americans built America.

But the rich fought back, and won big-time in 1980 when Reagan, until then the fringe “Voodoo economics” candidate who was heading into the election trailing far behind Jimmy Carter, was swept into the White House on a wave of public concern of the Iranians taking US hostages. Reagan promptly cut income taxes on the very rich from 70% down to 27%. Corporate tax rates were also cut so severely that they went from representing over 33% of total federal tax receipts in 1951 to less than 9% in 1983 (they’re still in that neighborhood, the lowest in the industrialized world).

The result was devastating. Our government was suddenly so badly awash in red ink that Reagan doubled the tax paid only by people earning less than $40,000/year (FICA), and then began borrowing from the huge surplus this new tax was accumulating in the Social Security Trust Fund. Even with that, Reagan had to borrow more money in his 8 years than the sum total of all presidents from George Washington to Jimmy Carter combined.

Read the rest of this great article by Thom Hartmann here.