“Back under Reagan it was decided that debt was good. Spending was increased, especially on defense, while taxes were cut.”
That is the democrat line. Yes, we spent more on defense. But saying taxes were cut is very disingenuous. The heavily mocked Laffer Curve was very real. The idiot GHW Bush called it voodoo economics. The concept was that a high tax rate suppresses the economy. A drastic cut in tax rates results in far more tax REVENUE being brought in.
Bottom line, when Reagan took office in 1980, the US Government took in 517 billion dollars. In 1988 AFTER Reagans tax cut, the government took in 909 billion.
Emotionally, a lower tax rate seems like a smaller piece of the pie. But if lowering it doubles the size of the pie, its a much bigger slice of food.
>>Bottom line, when Reagan took office in 1980, the US Government took in 517 billion dollars. In 1988 AFTER Reagans tax cut, the government took in 909 billion.
$517 B in July 1980 dollars is equal to $741 B in July 1988 dollars. So most of the increase is due to inflation. https://www.bls.gov/data/inflation_calculator.htm
Part of the rest of the increase is due to “bracket creep”, also a result of inflation. The remainder is due to the increase in GDP, which is in part due to the fiscal stimulation, but it is a very minor effect.
“A drastic cut in tax rates results in far more tax REVENUE being brought in.”
What the Reagan economic team actually said was that cutting tax rates wouldn’t lose as much revenue as static analysis predicted. That economic growth would recoup a large portion of the revenue that would otherwise be lost due to applying lower rates.
And that’s what happened. It’s all detailed in Lawrence Lindsey and Martin Anderson, who played major roles in designing and implementing Reagan’s tax policy.
The Reagan program included spending cuts as well, but with Democrats in control of the House Tip O’Neill reneged on those and years of deficits resulted.
The only lowered tax rate that actually generated increased revenue for the Treasury was the capital gains tax cut, ironically passed during the Carter administration in 1978.