8537
VIP Member
Raised them all the way from 70% to 28%.
After Reagan's first year in office, the annual deficit was 2.6% of gross domestic product. But it hit a high of 6% in 1983, stayed in the 5% range for the next three years, and fell to 3.1% by 1988. (By comparison, this year it's projected to be 9% but is expected to drop considerably thereafter.)
So, despite his public opposition to higher taxes, Reagan ended up signing off on several measures intended to raise more revenue.
"Reagan was certainly a tax cutter legislatively, emotionally and ideologically. But for a variety of political reasons, it was hard for him to ignore the cost of his tax cuts," said tax historian Joseph Thorndike.
Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime," Thorndike said.
Taxes: What people forget about Reagan - Sep. 8, 2010
As a result of the 1981 and 1986 bills, the top income tax rate was slashed from 70% to 28%.
Sounds familiar.
The money exposed to that 28% tax rate was much greater than the money exposed to the 70% tax rate, thanks in large part to TEFRA, the largest tax hike as a percent of GDP since WW2.