Yesterday President Obama tried to sell the “Buffett Rule” under a new moniker:
What Ronald Reagan was calling for then is the same thing that we’re calling for now: a return to basic fairness and responsibility; everybody doing their part. And if it will help convince folks in Congress to make the right choice, we could call it the Reagan Rule instead of the Buffett Rule.
Securing Ronald Reagan’s economic blessing is a new trend among liberals. And no wonder: Ronald Reagan is one of the most popular presidents in modern times.
But what did Reagan really say about the tax rates of the millionaire and the bus driver? Reagan proposed: “We’re going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share, the loopholes” that “sometimes make it possible for millionaires to pay nothing.”
Reagan closed tax loopholes; President Obama wants to raise taxes.
President Obama does not acknowledge the profound difference between the “fair-share” solution Reagan sought in 1986 and the redistributionist tax hike he is proposing today. The 1986 law revolutionized the tax code by eliminating dozens of loopholes to make all incomes taxable (Like the Paul Ryan [R–WI] tax reform plan). Reagan aimed to close tax loopholes, including the infamous three-martini lunch, but he never intended to take money from the small business owners who create the vast majority of American jobs.
It was Ronald Reagan who proposed the Economic Reform Tax Act [ERTA] of 1981, which cut marginal tax cuts by 25 percent across the board and reduced the highest marginal tax rate from 70 percent to 50 percent. Two years after ERTA was signed into law, America began almost two decades of robust economic growth.
Ronald Reagan knew from personal experience that if you raise taxes, you erect barriers to innovation and job creation. As a film star in the late ’40s and ’50s, Reagan was taxed at 91 percent, which caused him to remark: “Why should I have done [another] picture, even if it was Gone with the Wind?…What good would it have done me?” Reagan would’ve made only 9 cents on the dollar.
His rationale for cutting taxes across the board was based on more than just personal experience. Reagan believed—and was proven correct—that, “taken together, tax cuts and budget cuts…will put us back on the road to a sound economy, with lower inflation, more growth, and a government that lives within its means. Our goal is a very simple one: to rebuild this Nation so that individual Americans can once again be the masters of their own destiny.”
Obama is not honoring Reagan’s economic legacy. The President may see the same “Buffett” problem that Reagan saw, but he is proposing a radically different solution—one that will not work. Obama may not like it, but the real Reagan rule is that when you close loopholes and cut taxes for everyone—from the top to the bottom—everyone benefits.