Mirela Loftus of West Hartford, CT asks: “Why do I keep reading that Reagan in fact raised taxes as president and increased the debt when I thought it was exactly the opposite?”
OUR ANSWER: According to Heritage budget analyst Brian Riedl, Reagan did raise taxes in 1982 and 1983, but he also signed large tax cuts in 1981 and 1986. In 1982, Reagan signed into law the Tax Equity and Fiscal Responsibility Act (TEFRA), which, among other things, increased the Federal Unemployment Tax Act wage base and tax rate. TEFRA also doubled the excise tax on cigarettes and tripled taxes on telephone service. In 1983, Congress adopted — and Reagan approved — Social Security reforms that had been recommended by the Greenspan Commission, a panel formed by President Reagan. Those reforms included partial taxation of Social Security benefits.
Compare those increases to the cuts contained in The Economic Recovery Tax Act of 1981 (ERTA) and The Tax Reform Act of 1986. ERTA cut all income tax rates by 25 percent and The 1986 Tax Reform Act effectively decreased taxes for every taxpayer, according to the Congressional Budget Office. On the net, then, tax rates fell during Reagan’s presidency. It’s also true that the federal deficit increased under President Reagan — but mostly because the President had a difficult time getting Congress to rein in spending. Overall, Reaganomics created 15 million new jobs, rising incomes and economic growth — and included a defense buildup that bankrupted the Soviet Union. As Riedl writes, critics of President Reagan’s budget deficits should answer one simple question: Would you trade the collapse of communism, your smaller tax burden, some of your income — and possibly your job — in exchange for eliminating that $2.1 trillion in added debt? To read more about Reagan’s legacy, click here.
Nina Helene of Columbus, OH asks: “How do you obtain your information and what are the backgrounds of your researchers [and] writers?”
OUR ANSWER: We obtain our information from a variety of sources — and also from original studies conducted in our internationally renowned Center for Data Analysis. We include methodology information and sources in the footnotes of our research papers — so be sure to check those if you have questions about a particular piece of research. And, just as we use a variety of sources, Heritage analysts also have a wide variety of backgrounds. Degrees in law, economics and political science are common among Heritage experts, and many have worked in government or academia. To read staff member biographies, click here.
John Baucom of London, TN asks: “What realistically should the U.S. do to improve its energy dependence and the associated cost?”
OUR ANSWER: In this WebMemo, Heritage energy expert Nicolas Loris outlines the best way to create a diverse energy market. In the first place, Congress should streamline the onerous regulatory process for nuclear energy plants, Loris writes. That would create predictability and open competition for new technologies. Congress should also allow investors to take a tax deduction for all new plant and equipment costs, peel back regulations on renewable energy and limit litigation. And, in another WebMemo, Loris and fellow expert Ben Lieberman reiterate that sound energy policy seeks to increase domestic energy supply. That means that a rational post-Deepwater-Horizon-spill policy would still include offshore drilling. To read more about energy dependence, click here. If you’d like to know more about the oil spill, click here.