By Lewis Uhler and Peter Ferrara
Excerpt from The Daily Caller:
Sharply reducing income tax rates was the first step in Reagan’s economic recovery plan, which produced a record 25 year economic boom, from late 1982 to late 2007. As Art Laffer and Steve Moore wrote in their 2008 book, The End of Prosperity,
“We call this period, 1982-2007, the twenty-five year boom – the greatest period of wealth creation in the history of the planet. In 1980, the net worth – assets minus liabilities – of all U.S. households and business…was $25 trillion in today’s dollars. By 2007…net worth was just shy of $57 trillion. Adjusting for inflation, more wealth was created in America in the twenty-five year boom than in the previous two hundred years.”
Reagan reduced the top income tax rate from the 70% he inherited to 28%, first with the Kemp-Roth 25% across the board rate reduction, then through the 1986 tax reform. One more rate – 15% — applied to the middle class.
Reagan’s tax reforms abolished federal income taxes altogether on lower middle income workers and the working poor, raising the portion of federal income taxes paid by the top 1% from 17.6% in 1981, all the way to 40.4% by 2007, almost twice their share of adjusted gross income. Despite Reagan’s sharp reductions in income tax rates, federal revenues doubled in the 1980s, because of the resulting booming economic growth.
Trump proposed a revised tax reform plan in his September 15 economic policy address before the Economics Club of New York. That new plan is based on the tax reform plan proposed by House Speaker Paul Ryan’s Tax Reform Task Force, led by House Ways and Means Chairman Kevin Brady (R-TX).
The new Trump tax reform plan adopts the same three income tax rates of the Ryan-Brady plan – 12%, 25% and 33%, replacing the 7 income tax rates in the current tax code, which includes a top rate of well over 40%. The 12% rate would apply to married couples filing jointly up to $75,000 a year; the 25% rate applying up to $225,000; the 33% rate to incomes above that. Those rates apply to singles at half those incomes.
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