The passing of Ronald Reagan has rightfully spurred a review of his accomplishments. Most everyone, even political rivals, credit him with sowing the seeds of the destruction of Communism – for which the world should be grateful.
But no less historic was his effort to cut taxes. And many of his rivals – especially the big spenders – don’t want to admit that his tax cuts helped America remain the only economic superpower.
When Reagan took office, the highest tax rate on income was 70 percent. For every dollar earned over roughly $30,000, a worker had to give 70 cents to the government. Reagan thought this was too much. He believed that government did not have an inherent right to a worker’s money. Plus, as a student of the Coolidge tax cuts of the 1920s and the Kennedy tax cuts of the early ‘60s, Reagan knew that cutting taxes wasn’t only the moral thing to do – it was also the smart thing to do.
He pushed through the Economic Recovery and Taxation Act of 1981, which cut rates by 25 percent across the board. And for the rest of his presidency, real gross domestic product grew at an average annual rate of 2.8 percent. If you don’t count the recession year of 1982, real GDP grew annually at 3.2 percent.
In a radio commentary he wrote in 1977, which was published in 2001 in the book “Reagan, In His Own Hand,” the soon-to-be president put it this way in arguing for income tax cuts:
“People would have more of their money to spend as they wish & there would be more for investment to spend to expand our
industry. And govt. would reduce the deficit … because the tax base would be broadened by increased prosperity.”
Despite the nay-sayers and the big spenders, Reagan got his tax cuts. And for that, we should all be grateful as well.