Reagan did NOT increase government revenue with tax cuts

[Zuni]

from Media Matters, on a false statement by Sean Hannity:

Hannity falsely claimed Reagan tax cuts "doubled revenues ... from $500 billion to over $1 trillion"


On the September 15 edition of Fox News' Hannity & Colmes, co-host Sean Hannity falsely asserted that President Reagan's 1981 tax cuts "doubled revenues ... from $500 billion to over $1 trillion." In fact, when adjusted for inflation, revenue growth during Reagan's eight years in office was far more modest than Hannity proclaimed. Moreover, there is no consensus among economists on whether the 1981 tax cuts were the cause of revenue increases during the Reagan years.

According to the White House's Office of Management and Budget (OMB), when adjusted for inflation to constant fiscal year 2000 dollars, receipts (revenues) increased only from $1.077 trillion to $1.236 trillion during Reagan's term in office. Even in unadjusted (current) dollars, Hannity's claim that revenues "doubled" to more than $1 trillion during the Reagan administration is false: From 1981 to 1988, revenues in current dollars increased from $599.3 billion to $909.3 billion.

From OMB:

FISCAL YEAR
REVENUE IN CURRENT DOLLARS (billions)
REVENUE IN CONSTANT FY2000 DOLLARS (billions)

1981
599.3
1,077.4

1982
617.8
1,036.9

1983
600.6
961.7

1984
666.5
1,016.8

1985
734.1
1,082.6

1986
769.2
1,107.3

1987
854.4
1,196.1

1988
909.3
1,235.6


Further, evidence suggests that the Reagan tax cuts were not the cause of the revenue increases that did occur during the 1980s. As the Center on Budget and Policy Priorities (CBPP) has documented, citing figures from OMB, "Income tax receipts grew noticeably more slowly than usual in the 1980s, after the large cuts in individual and corporate income tax rates in 1981." By contrast, "income tax collections grew much more rapidly in the 1990s," when "marginal income tax rates at the top of the income spectrum were raised," CBPP noted.

From a September 15 Hannity & Colmes discussion of President Bush's speech on Hurricane Katrina relief efforts:

HANNITY: What I liked about what the president did tonight is, we're going to help, but we're going to help the right way -- a Gulf Opportunity Zone, Enterprise Zone, tax breaks. The private sector, the public sector joining together and doing the right thing. That is conservatism -- compassionate conservatism.

ALAN COLMES (co-host): But when you talk about tax breaks, though, how do you pay for it? He's got to address at some point how do we pay for these billions and billions of dollars? Do you do it with tax cuts?

HANNITY: Everybody -- well, tax breaks actually increase revenues to the government. Reagan doubled revenues by cutting taxes, from $500 billion to over a trillion, and he did it in eight years.

COLMES: Biggest deficits in history up until now with Reagan.

HANNITY: No. He doubled revenues to government. More money came in than ever before.


*notice how in 1983, the government intake went much lower? That is the pure effect of the tax cuts. In 1983, Reagan raised payroll taxes, the largest (by far) tax increase in history, in a regressive tax no less, and used the surplus SS money to offset the defecit

Supply side economics is built on a lie

[Commie Pinko Dirtbag]

1. Eeerie double symbolism: the 1984 revenue is $666 billion (nt)

[Zuni]

2. oooh---that is creepy

:scared:

[RaleighNCDUer]

8. That kind of jumped out at me, too. nt

[electropop]

3. I am so sick of the Pukes repeating that lie.

I knew at the time, and at all times thereafter, that it is BS. Reagan caused tremendous damage to the US economy and harmed the middle class and the poor. These "conservatives" remember it as a golden age, because it ushered in a new Gilded Age: an era of robber barons and serfs. Guess which category they fall into?

[Fenris]

4. Logic - the enemy of the conservative.

Tax breaks actually increase revenues to the government. Reagan doubled revenues by cutting taxes, from $500 billion to over a trillion, and he did it in eight years.

Increasing revenue by cutting taxes - something tells me this runs counter to actual economic principles. But what do I know? I don't have a radio or television show.

[annabanana]

Those who can make you believe absurdities...

Can make you commit atrocities - Voltaire

[Zuni]

9. In 1964, the JFK-LBJ did actually increase revenues

and gave a substantial boost to the economy. That, coupled with a substantial regulatory and public service/welfare spending increased demand and cut unemployment and poverty. (getting money to the poor is the fastest way to increase demand and boost the economy. They will spend quick) But in 1960, when JFK was elected, Taxes were FAR, FAR higher than they are now. The top Federal rate was 90%, a confiscatory rate.

They took the top rate down to 70%, and gave substantial tax cuts across the board, greatly helping both workers and business leaders.

The supply side nonsense has no basis in reality, as it is demand that drives hiring and the economy in general, not supply. Giving a tax cut to a guy who already has millions isn't going to change his spending habits a whole lot, especially when he has loopholes and tax shelters to keep him from paying what he actually owes in the first place

[fob]

11. A few comments on their "Laugher" Curve nonsense

Going by their "logic" we should cut the tax rate 0% which would then produce INFINITE revenue :eyes:

Also why do the repukes ALWAYS bring up the huge tax CUTS of raygoonomics but NEVER the following SEVERAL tax INCREASES that saved us from all that supply-side crap.

No need to answer that last one, I know it's because they're all assholes.

[Coexist]

5. thanks for this n/t

[kentuck]

6. The truth is that the increase in FICA taxes in 1983 was responsible...

for bringing in more revenues - not the taxcuts. It was a tax "increase" sold under the pretenses of "saving" Social Security but in truth, to keep from repealing the taxcuts for the wealthy. It's a shame the extent they will go to protect rich folks like Rush Limbaugh...

[Zuni]

10. yep. The FICA tax hike (the largest hike in US history)

accounts for much of the added revenue. Notice, before the FICA hike, revenue was down from the year before.

[flamingyouth]

15. Exactly.

Great post. :thumbsup:

[RaleighNCDUer]

7. Of course, he bolsters his argument with statistical lies.

599 billion does not equal 500 billion. Nor does 909 billion equal a trillion. He rounded down by 99 billion at the starting point and rounded up by 91 billion at the opposite end - that's a 190 billion dollar difference from his assertion. About a 40% difference.

I feel sorry for Colmes - Hannity prepares his lies in advance, leaving Colmes to attempt to counter them ad-lib.

EDIT: spell check did not correct 'Combs'.

I also notice that when Colmes mentions the Reagan deficit, Hannity denies the deficit by claiming that Reagan 'doubled' the revenue -- even if it were the case, which it is not, revenue has nothing to do with deficit. The spending on industry/military boondoggles far outstripped revenues, and Reagan would have had to quadruple revenues to keep up with his spending.

But he was downright frugal compared to the Chimp in Chief.

[bos1]

12. don't get me started

I remember those days -- what happened was all the public services that needed money after his tax cuts for the rich started "user's fees", so permits and such went up in price astronomically. Cities started relying on parking tickets and such for their revenues, turning their police into tax collectors. But the effect of users fees is to transfer more tax burden from the rich to everyone else, since a 20 buck permit that used to be 5 bucks or a 150 dollar parking ticket is a much larger percentage of a low income budget than a high income one.

This squeezed started slow but got worse and worse, and then we slowly started to have more and more homeless -- before Reagan, the USA didn't have a massive homelessness problem. Reagan started the trends that led to the third-world USA we now have in much of the country. I told you not to get me started!

[Poiuyt]

13. Voodoo economics

That's how George HW Bush called it. His son should listen

[SeekerofTruth]

14. Um, isn't it hypocrytical of him to brag about bigger govt?

Not to change the discussion, thanks for pointing out his lies. But, don't repukes want smaller government, thus less taxes? Why would he brag about more taxes?

I wish Colmes would point out his hypocrisy.

[lateo]

16. Reagan's tax cuts were repealed....

by...Republicans. Not very many people remember this fact but Bob Dole lead the charge to have this done.

[Mountainman]

17. In 1986 Congress changed the depreciation rules which had an effect of

increasing tax revenues. You could not take as large of a depreciation deduction and thus higher taxes were paid but the repukes say these higer revenues were because of tax cuts.

[Coexist]

18. Zuni - I would like to use two quotes of yours (from posts below)

in a rebuttal to a LTTE in my local paper - do I have your permission?

[hadrons]

19. Here are some of the tax increases during the Reagan years

In 1982 over $230 billion in tax increases. This included the Tax Equity and Fiscal Responsibility Act (TEFRA), the biggest tax hike in history up to that time, $214 billion in its first five years, or $2,562 per household. As chairman of the Senate Finance Committee, Bob Dole was key to convincing the Reagan White House to go along with the massive tax hike. Without TEFRA, Dole said at the time, "the deficits wouldn't go down." The deficit soon shot to record heights anyway.

In 1983, Social Security tax increases, a seies of automatic tax increases totalling $58 billion in the first five years, or $691 per household.

In 1984, Finance Chairman Dole steamrolled through the $132 billion Deficit Reduction Act (DEFRA), totalling $890 per household.

In 1985, $13 billion Consolidated Omnibus Reconciliation Act(COBRA) bill totalling $150 per household.
In 1986, increase capital-gains taxes in a trade-off which reduced marginal income tax rates, all part of the "revenue neutral" Tax Reform Act. In addition to nearly $23 billion in other assorted tax


Of course, these figures don't include payroll taxes; property taxes; sales taxes; state taxes; sin taxes and hidden taxes and gas taxes and government fees like yearly title fees, car inspection and insurance requirements and the like.

BTW, the Repukes controlled the Senate and Reagan NEVER vetoed a tax increase to my knowledge