Politics / Taxes

Celebrating 40 Years of the Reagan Tax Cuts

AMAC Exclusive By: Seamus Brennan

reagan

In the wake of President Biden’s repeated calls for one of the largest tax hikes ever proposed and Senate Democrats’ introduction of the largest spending bill in United States history, America today commemorates the 40th anniversary of President Ronald Reagan’s revolutionary 1981 tax cuts.

The Economic Recovery Tax Act of 1981, passed during Reagan’s first year in office, has long been celebrated by conservatives as a flagship of the Reagan era and credited by many economists as having generated the historic economic gains of the 1980s and ‘90s. The Act consisted of a 25 percent reduction in tax rates for all Americans and, in conjunction with a 1986 tax reform effort, ultimately slashed the highest level of marginal tax rates from 70 percent to 30 percent. Following enactment of the bill, 14 million new jobs were created over a five-year period, American incomes increased by more than 22 percent over the next seven years, and the economy grew by an average of more than 3.5 percent for the rest of the decade.

The 1986 tax cuts cultivated lasting economic prosperity that reversed the stagnation of the Carter years and introduced the blueprint for conservative tax policy and economic freedom for years to come. Reagan’s tax cuts popularized the now-dominant theory of supply-side economics, incentivized innovation and entrepreneurship on a national level, and established the framework for President Trump’s 2017 Tax Cuts and Jobs Act, which led to arguably the greatest American economy on record.

Yesterday, the Heritage Foundation and the Committee to Unleash Prosperity co-hosted a public webinar commemorating the Reagan tax cuts. Moderated by former Reagan and Trump administration economic advisor Larry Kudlow, the event featured a panel of Reagan administration alumni including Anthony Dolan, former chief speechwriter for President Reagan; Steve Forbes, head of Reagan’s Board of International Broadcasting and current CEO of Forbes, Inc.; Arthur Laffer, a member of Reagan’s Economic Policy Advisory Board; former Attorney General Ed Meese, and Stephen Moore, a member of Reagan’s Privatization Commission. Also on the panel was Judy Shelton, a former economic advisor to President Trump.

“America was on the defensive in the 1970s,” Kudlow said during the webinar. “And that all changed in the Reagan years,” he continued, citing the United States’ prominent international position as Reagan’s greatest legacy. Forbes echoed this sentiment, urging the Biden administration to avoid the mistakes of the Carter era not only for economic reasons, but for reasons of “morale” and world leadership: “Let’s turn it around and not make the same mistakes again,” he said.

In an interview with AMAC Newsline, Dolan said the Reagan tax cuts “changed everything.” Their significance, he said, derives from their success in proving why the individual person, left to his or her own devices, can make better decisions for their own life than far-away bureaucrats in Washington: “If you let market forces take over and not have a bunch of philosopher-kings trying to interfere with them, and get people back their money, and let them spend and create,” Dolan said, it shows that “consumers make better decisions than oligarchies.” Dolan also noted that the tax cuts “made the victory in the Cold War possible” and led to the death of “what Reagan called ‘the cult of the state’”—showing the world the all-encompassing benefits of economic freedom and reduced federal power.

As Democrats continue to pursue colossal tax hikes and spending plans, Dolan predicts it will amount to “political suicide.”

“There’s nothing like the economic issue when it goes against you,” Dolan said. And for today’s Democrats, “it already has.”

“They have learned nothing,” he added. Even as inflation continues to skyrocket, wages continue to plummet, job growth continues to stall, everyday costs continue to rise, and economic confidence continues to dwindle, the Democrats as recently as this week took steps toward launching a pilot program for a mileage tax in their so-called “infrastructure” package.

If Dolan’s assessment proves correct, as history suggests it will, Democrats are setting themselves up for a blistering defeat come next year’s midterms and the looming 2024 presidential election. Until the Left can understand the timeless wisdom of the Reagan economic approach and grasp the elemental truth that the people—not the government—are entitled to the fruits of their labor and are best equipped to make their own decisions, they will likely suffer at the ballot box.

On this 40th anniversary of the landmark Reagan tax cuts, every American should hope that President Reagan’s groundbreaking legacy of freedom continues for decades to come.

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Garye
3 months ago

President Trump, President Reagan, and President Lincoln – REAL American made, America First, FOR American Citizens!!!
Useless, failed, corrupt democrats are pathetic losers!!
America its Constitution and Citizens are what these three GREAT Presidents put before party and politics!!!

JohnH
3 months ago

Ronald Reagan rode into town with some political experience under his belt. He put together a strong support group & put AMERICA first and not his party agenda. And then, I give Bill Clinton credit as the last POTUS to balance the budget.

PaulE
3 months ago
Reply to  JohnH

It was Newt Gingrich and the Republican controlled House of Representatives that held Clinton’s feet to the fire and prevented the kind of reckless spending Clinton wanted to do. Perhaps you’ve forgotten all the massive proposed spending initiatives, like Hillary Care, that Clinton tried to enact in his first term. That led directly to the Democrats losing the House and some fiscal restraint finally being exercised by the Republican controlled House in Clinton’s second term. The House held the line for a few years to create that balanced budget that you’re crediting Clinton with creating.

The problem is the establishment Republican party lost sight of those hard fought for Reagan principles through the G.W. Bush years and gradually morphed into being Democrat-lite. Then once the Democrats regained full control of Washington under Obama, all fiscal constraint vanished into thin air and reckless deficit spending became acceptable.

Now under your guy, “moderate” Joe Biden, we’ve gone from spending billions we don’t have to spending trillions every few months we don’t have. This of course can’t be sustained at this rate much longer, so people better understand we’re about to get an abrupt wake-up call in terms of much higher inflation and higher tax rates across the board. After all, free stuff isn’t really free.

Garye
3 months ago
Reply to  PaulE

Correct!!!
No democrat has EVER cared about America and its Citizens!!
ALWAYS the democrats have ONLY cared about their personal wealth and power.
The republican party’s problem is democrats pretending to be Republicans.
They ALL need to be exposed, start with EVERYONE that voted for the biden schumer BS infrastructure garbage !!!

Art
3 months ago

AMAC and discussion appears to be going “Wing Nut”. I was blocked. I suggested the the term “Invasion” vs “Influx” was incorrect. I was blocked. Thank you Zuckerberg. AMAC stomping softly.
Bye Bye. You have been infitrated,

Dave
3 months ago

Tax cuts and a simultaneous military build-up that took America from being the biggest lender on the planet to being the biggest debtor. A mixed blessing, to be sure. Too bad that GHWBush and Slick Willlie followed that up with the mass “parting out” of our industrial capacity.

If I recall correctly, the Economic Recovery Tax Act of 1981 was followed by over 425 custom tweaks and “no fanfare” changes to the tax code. More cuts in an obviously self-induced deficit slide. Only 1 in 100 of those changes were of any benefit to American households earning less than 100k. That WAS a big number, back then.

We can’t keep trying to have it both ways. We’ve already maxxed out the tax cut game. We owe too much.

Bob L.
3 months ago

I had saved a C-span link some time back and noticed it in my list yesterday, so I watched it again.
It’s Reagan giving a speech for Barry Goldwater in 1964 and WOW, the numbers today are bigger, but the message is the exact same as what we are experiencing now.

“Ronald Reagan’s A Time For Choosing Speech”
c-span.org/video/?153897-1/ronald-reagans-a-time-choosing-speech

Dave
3 months ago
Reply to  Bob L.

That kind of 1981-era economic “fluffing” isn’t going to work so simply today. We owe too much, and as our trade imbalance with China increases their REAL wealth, their influence over our creditors will increase to the point where we won’t be able to call the shots any more. Then, the jealous world “gets even” with us and the real slide begins.

We can’t keep spending like this. We have to start paying as we go.

Bill on the Hill
3 months ago

Thank you Seamus Brennan… One line that really caught my attention was, “There’s nothing like the economic issue when it goes against you,” Dolan said. And for today’s Democrats, “it already has.”
That is a sad truth, however it matters not to the CCP controlled occupiers currently running the ” S**t S**W in Washington, DC…Very well written article harking back to the Reagan era, a man that surrounded himself with highly qualified people to make those tax cuts a reality & more times than not it seems, fail to get the credit they so richly deserved…It brings me back to the present in the form of the Trump administration, that I believe emulated the Reagan era in so many ways…
I want to end this on a positive note & give credit where it is due on a very well written article…
Bill on the Hill… :~)

Max
3 months ago

I do miss the common sense of the Reagan presidential era.

JohnH
3 months ago
Reply to  Max

Ronald Reagan was the best POTUS in my lifetime. He could get things done both foreign and in United States. He listened to advice & expertise of his staff & did not make rash decisions.

Max
3 months ago
Reply to  JohnH

Agree.

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