Washington Post fact checker Glenn Kessler gives Senator Rand Paul Three Pinocchios for making the following claim on TV:
Ronald Reagan … said we’re going to dramatically cut tax rates. And guess what? More revenue came in, but tens of millions of jobs were created.
Before examining whether or not “more revenue came in,” consider just how dramatic the Reagan-era tax changes really were. Under the first bill in 1981, all personal tax rates were eventually reduced by 23%. But it is often forgotten that these rate reductions in were foolishly delayed until 1984. By then, however, the 49% tax bracket was down to 38%, the 24% rate to 18% and the 14% rate to 11%.
When the 1986 Tax Reform took effect in 1988, higher marginal tax rates fell further to 28-33% for those previously in tax brackets of 38-50%. The corporate tax was cut from 46% to 34%. After being reduced to 20% from 1982-86, however, the top capital gains tax was raised to 28% in 1987 before being rolled-back to 20% in 1997 and 15% in 2003.
Mr. Kessler mainly takes issue with Senator Paul’s comment that “more revenue came in” after the highest marginal tax rates on income or capital gains were reduced (I’ll deal with jobs issue in a separate blog).