The Tea Terrorists are a fickle group. Besides being inherently stupid, they would be calling for Reagan's ouster with the former president's speech below.
With regard to tax loopholes for millionaires, Ronald Reagan's answer was recorded multiple times. See how the following clip compares history with today.
Originally Posted by Little Stevie
Nothing like a good, old-fashioned
apples-to-oranges comparison!
The blatant disingenuousness of Obama's invocation of the Reagan clip can easily be understood by anyone willing to engage in the tiniest bit of critical thinking.
Consider the debate at the time leading up to the bipartisan Tax Reform Act of 1986. At the time, the top tax bracket for individual income was 50%. In the 1970s, it was 70%. Yet even that high rate did not extract all that much revenue from affluent investors, who were able to dodge its potential effects quite easily through accelerated depreciation and other means. Partnerships were often designed around multi-year scheduled capital contributions structured in such a manner that an investor's tax deductions were a multiple of that year's contribution, so that if the partnership actually made money (many didn't, and only provided tax savings) any returns were just icing on the cake!
None of that is the case today. But even more to the point, Obama and most other Democrats are not talking about individual income tax rate reductions in return for base-broadening. Instead, the obsession
du jour seems to be a 5.6% tax surcharge on high incomes. Put that together with elimination of deductions and exclusions and you have something completely different from the proposals likely to be pushed.
That wouldn't raise all that much additional revenue, but it certainly might make a lot of people "feel better", and it's probably an effective political ploy. It exploits what I think is probably the Republican Party's biggest weakness -- namely that almost all Republican representatives and senators have pledged fealty to Grover Norquist's anti-tax platform, promising that no tax will be raised on anyone at any time for any reason. For the Democratic Party's part, their position isn't much different. Essentially, it's that no tax shall be raised on anyone at any time for any reason -- unless that person has an income greater than $250K! (In terms of impact on the deficit, there isn't much daylight between those two positions.)
If Obama actually wanted to advance arguments similar to those made by Reagan in 1985, he would have done well to embrace the recommendations of the Simpson-Bowles commission. Instead, he completely ignored them and offered a budget proposal so unserious that it was overwhelmingly rejected by Senate
Democrats earlier this year.
Another favorite target of liberals is the capital gains tax rate, which is now 15%. You might be able to push it a few percentage points without serious distortive effects, but raising it to levels sufficient to excite those on the left would produce unintended consequences. There's a clear inverse correlation between capital gains realizations and the top-bracket cap gains tax rate.
