House Majority Whip Eric Cantor sat for a profile with “60 Minutes” correspondent Lesley Stahl last week. It was a mostly constructive exchange except for a minor flap over President Reagan’s record on taxes. When Stahl claimed that Reagan “raised taxes and it was one of his principles not to raise taxes,” Cantor’s press secretary interrupted the interview, asserting, “That just isn’t true. And I don’t want to let that stand.” Stahl then reported, “There seemed to be some difficulty accepting the fact that, even though Ronald Reagan cut taxes, he also pushed through several tax increases, including one in 1982 during a recession.” Stahl’s second statement is indeed true. President Reagan did sign legislation that raised taxes, including the 1982 budget deal he struck with congressional Democrats. But Stahl’s first statement, as Cantor’s press secretary may have been trying to point out, is not true. Reagan, like all conservatives, hated raising any taxes at any level of government. But he also believed that not all taxes are created equal. As Reagan historian Steven Hayward once explained, “Reagan was stalwart on protecting low tax rates in income and investment that drive economic growth, less so on excise taxes and the business tax code that is the plaything of special interest.”
Reagan’s record backs Hayward’s description up. The 1982 tax hike that Stahl referred came on the heels of a 1981 tax cut that was twice as big as Reagan first proposed. All the 1982 tax hike did is raise some excise taxes and get rid of some tax loopholes created in 1981 that Reagan had never wanted in the first place. And Reagan only agreed to those tax hikes on the express agreement from House Speaker Tip O’Neill that congressional Democrats would then cut federal spending by $3 for every $1 raised in taxes. Those spending cuts never happened, prompting Reagan to later say “I’m still waiting for those spending cuts.” He viewed the 1982 budget deal was one of the biggest mistakes of his career.
Reagan later acceded to a hike in the gasoline tax in 1982, and a change in how employer-paid health insurance plans were tax deductible in 1985. Then in 1986, Reagan signed the Tax Reform Act of 1986, which raised revenue by closing multiple loopholes in the federal tax code and massively lowered marginal tax rates for all taxpayers. When Reagan came into office, the United States had 15 separate tax brackets and a top marginal rate of 50 percent. When Reagan left office, there were only two brackets and the top marginal rate was just 28 percent. Today, President Obama and congressional Democrats want to take us in the opposite direction. At every turn this year, they have proposed higher marginal rates and/or new tax brackets. So Cantor was exactly right to invoke Reagan as an inspiration in the House Republicans fight against higher marginal tax rates.
