Now, I went back, I mentioned to you that you can find, in the 1980s, you can find evidence of Ronald Reagan with similar tax proposals to what I have seen of the Trumpster’s. If you go back to May of 1985, after the first Reagan tax cuts, he proposed even more tax reform. He made a speech, and in the speech announcing his new proposals, which included slashing taxes for families, as Trump has done today, in that same speech Reagan said the following: “Under our new tax proposal the oil and gas industry will be asked to pick up a larger share of the national tax burden. The old oil depletion allowance will be dropped from the tax code except for wells producing less than 10 barrels a day. By eliminating this special preference, we’ll go a long way toward ensuring that those that earn their wealth in the oil industry will be subject to the same taxes as the rest of us.
“This is only fair. To continue our drive for energy independence, the current treatment of the costs of exploring and drilling for new oil will be maintained. We’re determined to cut back on special preferences that have too long favored some industries at the expense of others. We would repeal the investment tax credit and reform the depreciation system. Incentives for research and experimentation, however, would be preserved. There is one group of losers in our tax plan,” Reagan said in May of 1985. “– those individuals and corporations who are not paying their fair share or, for that matter, any share. These abuses cannot be tolerated. From now on, they shall pay a minimum tax. The free rides are over.”
Now, some of this may come as a surprise to some of you because the impression of Reagan and taxes is that it was slash, slash, slash, cut, cut, cut, and of course by the time the left gets through with what Reagan did, the rich weren’t paying anything. I don’t know how many of you, because that has been part of the left’s history revisionism since the 1980s, I don’t know how many of you think that Reagan got rid of taxes on the rich. But it’s just the exact opposite, folks. The rich ended up paying more after Reagan’s tax reform. And the way it was made to happen was not by raising their rates, it was by lowering their rates and getting rid of all these silly brackets where income could be sheltered for crazy, wacko investments. Deductions, they were called.
The top marginal rate was 90% when he took office, maybe was 70% when he took office, 70 or 90. We did have a 90% tax rate at some point. Maybe 70 when he took office. And when he left office, it was down 28%. So what happened is that it became much easier and attractive for the wealthy to declare their income and only pay 28 cents of every dollar rather than go through a much complicated procedure to try to avoid a 90% bracket that was paid on of course the last dollars people earned. How else do you explain, after Reagan’s tax cuts, this has always been the story I’ve tried to use to explain tax cuts generating revenue.
In 1981 Reagan takes office, top marginal rate 70%. The amount of revenue collected via the tax code is about a half a trillion dollars. Eight years Reagan leaves. The top rate’s down to 28% from 70, and the amount of money collected from the tax code’s almost doubled to 900 some odd billion dollars by reducing the rates. When they tell Democrats about this, the Democrats, “Well, that doesn’t matter to me. It’s not fair that the rich only pay 28%, it’s not fair, we need a higher rate on ‘em.” It’s not about the revenue to them. It’s about punishment.
So when I look at Trump’s tax proposal here — and again, it’s a cursory glance — it doesn’t look like a left-wing tax plan to me. It looks like and sounds like, in fact, like maybe some people that helped Reagan put his together are working for Trump. It’s that close. You know, oil and gas has been replaced by the carried interest hedge fund guy. But clearly there are people today, as there were then, who weren’t paying any tax. Reagan made sure that that was ended.
Contrary to what people have been told that Reagan cut taxes for the rich, it’s just the exact opposite. He might have cut rates or implemented low rates on income that was not taxed at all, but the rich ended up paying more — and they still are, by the way. You’ve seen the numbers on this: 50% of all taxes are paid by the top 2% wage earners. It’s really kind of out of balance now. But my point is that no one, despite all of this, cut taxes of every kind more than Ronald Reagan did. Individual tax rates, corporate tax rates.
Nobody cut taxes more or better than Reagan did. Yet in order to flatten tax rates and increase deductions of certain kinds — which was intended to spur growth and assist families — he insisted on closing some loopholes in exchange for lowering the rates. Well, I’m sorry. That seems like the exactly what Trump is doing. And again, I hedge this on the basis that I just have a cursory glance at this, but Trump’s talking about four rates, and one of them is zero.
So actually there’s three brackets — 10, 20, and 30, or 5, 10, and 20, whatever it is. Yeah, the 20, 25, top marginal rate now is 39.6%. So he’s gonna cut taxes for everybody. You know, I still think this is too complicated. I’m for a fair tax or flat tax. You know, take 15% or 18% and be done with it. I know that’s never gonna happen. I know the tax code writers are never gonna give up their power. We’d have to elect a whole brand-new Congress.
But nevertheless, that’s what I favor. But let’s not sit here and pretend that Trump’s tax plan is