Would the Reagans Pay More Income Taxes Today?
668 words
By David Demers
Former President Ronald Reagan and his spouse Nancy saved $91,619 on their 1982 taxes after he signed bills that substantially cut federal income taxes for wealthy taxpayers during his first term.
The First Couple paid $292,616 in taxes on an income of $741,253. Their effective tax rate was 39 percent (see column 4 in the Table below).
Without the tax cuts, they would have paid $384,235 (52%; see column 3).
They saved 24 percent ([$292,616 – $384,235] ÷ $384,235).
The bounty came after Reagan promoted and signed tax-cut bills in 1981 that reduced the top earned-income tax bracket from 70 percent to 50 percent and the capital gains rate from 28 percent to 20 percent. About 35 percent of the Reagans’ income came from the sale of one of their homes ($256,978), which was taxed at the lower capital gains rate (20% in 1982 versus 28% in 1980).
Without the tax cuts, the Reagans in 1980 would have paid 57 percent of their income in taxes instead of 39 percent (see column 1).
“Reagan has been criticized for pushing tax cuts mainly for the rich while cutting social programs meant to protect the poor,” the Washington Post wrote at the time. “His own return is an illustration of what his policies meant to one rich family.”
Indeed.
But are these tax benefits still around today?
YES, even more so.
If the Reagans were filing today, they would save an additional 11.4 percent on their tax bill. Their inflation-adjusted income would be $2,396,959 in 2025 (see column 5). They would receive a personal deduction of $29,200, instead of $3,400. Their total tax bill would be $833,774, or 35 percent of their total income, which is 4 percentage points less than in 1982.
Thirty-five percent may seem like a lot.
But had Reagan and other Republican presidents since him discontinued cutting taxes to the wealthy, wealthy taxpayers would be paying a lot more (57 percent instead of 35 percent).
These tax cuts are the major reason the U.S. Department of Treasury has failed to raise enough money to balance annual budgets and why the national debt continues to grow at a rapid pace. As I’ve noted in several other commentaries, federal spending is NOT a major cause of the soaring national debt, because it has only increased at an inflation-adjusted annualized rate of 2.6 percent since 1980.
In sum, the Reagans, who are top 1 percent of all taxpayers in terms of income, would be paying 40 percent less in federal income taxes today than in 1980. The rates are even lower for other taxpayers in the top 10 percent, a topic I'll address in my next commentary.
668 words
By David Demers
Former President Ronald Reagan and his spouse Nancy saved $91,619 on their 1982 taxes after he signed bills that substantially cut federal income taxes for wealthy taxpayers during his first term.
The First Couple paid $292,616 in taxes on an income of $741,253. Their effective tax rate was 39 percent (see column 4 in the Table below).
Without the tax cuts, they would have paid $384,235 (52%; see column 3).
They saved 24 percent ([$292,616 – $384,235] ÷ $384,235).
The bounty came after Reagan promoted and signed tax-cut bills in 1981 that reduced the top earned-income tax bracket from 70 percent to 50 percent and the capital gains rate from 28 percent to 20 percent. About 35 percent of the Reagans’ income came from the sale of one of their homes ($256,978), which was taxed at the lower capital gains rate (20% in 1982 versus 28% in 1980).
Without the tax cuts, the Reagans in 1980 would have paid 57 percent of their income in taxes instead of 39 percent (see column 1).
“Reagan has been criticized for pushing tax cuts mainly for the rich while cutting social programs meant to protect the poor,” the Washington Post wrote at the time. “His own return is an illustration of what his policies meant to one rich family.”
Indeed.
But are these tax benefits still around today?
YES, even more so.
If the Reagans were filing today, they would save an additional 11.4 percent on their tax bill. Their inflation-adjusted income would be $2,396,959 in 2025 (see column 5). They would receive a personal deduction of $29,200, instead of $3,400. Their total tax bill would be $833,774, or 35 percent of their total income, which is 4 percentage points less than in 1982.
Thirty-five percent may seem like a lot.
But had Reagan and other Republican presidents since him discontinued cutting taxes to the wealthy, wealthy taxpayers would be paying a lot more (57 percent instead of 35 percent).
These tax cuts are the major reason the U.S. Department of Treasury has failed to raise enough money to balance annual budgets and why the national debt continues to grow at a rapid pace. As I’ve noted in several other commentaries, federal spending is NOT a major cause of the soaring national debt, because it has only increased at an inflation-adjusted annualized rate of 2.6 percent since 1980.
In sum, the Reagans, who are top 1 percent of all taxpayers in terms of income, would be paying 40 percent less in federal income taxes today than in 1980. The rates are even lower for other taxpayers in the top 10 percent, a topic I'll address in my next commentary.