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Thursday, February 21, 2013

Reagan, Congress, and Taxes

Major points:
  • Jack Kemp pioneered tax cuts as GOP policy: Reagan followed.
  • Tax increases followed the tax cuts of 1981
  • The 1986 tax reform created strange allies and opponents.
1977:  Jack Kemp introduces the first version of the Kemp-Roth tax cut bill
1978:  Proposition 13 in California elevates tax-cutting as a political issue.
1980:  Reagan adopts the Kemp approach; Bush disagrees during the primaries.
1980:  Reagan defeats Carter, GOP wins the Senate for the first time since the 1952 election and makes major gains in the House.
1981:  Congress approves sweeping tax bill with across-the-board cuts.  The key vote in the House takes place on July 29, when it passes an administration-backed substitute to the committee bill:

Northern Democrats
Southern Democrats
1982: Reagan backs the Tax Equity and Fiscal Responsibility Act, which modifies some of the 1981 business tax cuts and imposes new excise taxes, for an estimated revenue gain of $98 billion over 3 years.  Reagan regrets he legislation, believing that Democrats had reneged on spending cuts. Newt Gingrich accuses Reagan of “trying to score a touchdown for liberalism, for the liberal welfare state, for big government, for the Internal Revenue Service, for multinational corporations, and for the various forces that consistently voted against the president.”
1982:  Reagan approves a nickel-a-gallon gas tax increase to pay for mass transit and highway repairs. 
1983:  Reagan endorses payroll tax increases recommended by the commission on Social Security reform.
1984:  In his State of the Union Address, Reagan says he is asking Treasury Secretary Regan to make specific recommendations on tax reform -- the month after the election.
1984:  Reagan signs legislation to raise taxes $50 billion through fiscal 1987, mostly by closing loopholes and increasing taxpayer compliance.
1984:  With a comma, the GOP platform commits the party to oppose tax increases.
1984:  Walter Mondale promises to raise taxes, and Reagan uses the issue in the campaign.
1985:  Reagan proposes sweeping tax reform.  After he makes a nationwide address in favor of the idea, Ways and Means Chair Dan Rostenkowski makes an address of his own, largely in support.
1985:  House Republicans join with dissident Democrats to defeat the rule for considering the tax bill. Reagan eventually gets enough of them to change their votes so the bill can proceed.
1986:  After Senator Robert Packwood reverses his earlier reluctance and redrafts the bill in an alcoholic haze, the Senate passes its version.  The bill soon reaches Reagan's desk.
1986:  Polls show the public to be indifferent at best.  Later polls show widespread disapproval.  Republicans lose the Senate in the 1986 midterm.
2013:  Vast majority of House members and senators have no firsthand experience of the 1986 reform.