As President Trump continues to find his way in the “swamp,” his administration’s next big goal is trying to enact a huge tax cut. According to Treasury Secretary Steve Mnuchin, the plan would enact “the biggest tax cut and the largest tax reform in the history of our country.”
While it’s difficult to compare taxes across decades, two common ways to measure are the dollar amount of tax cuts and the percentage taxes fall at the top individual income bracket.
President John F. Kennedy is often credited with spearheading the first major tax cut in modern U.S. history, though President Lyndon B. Johnson signed the final legislation after Kennedy’s assassination. The Revenue Act of 1964 cut the rate for top tax bracket from 91 percent to 70 percent, as well as reducing the corporate tax rate from 52 percent to 48 percent. According to the Wall Street Journal, during its first year, the measure cut taxes by $11.5 billion — which, adjusted to today’s dollars, is around $91 billion.
The largest tax cuts by several measures were enacted during the two terms of Ronald Reagan’s presidency through two major tax reforms. While Regan’s first tax reform, in 1981, cut taxes in the first year by $102 billion in today’s dollars, Congress later retracted some of the enormous cuts as the deficit increased. His second tax reform is widely considered to be the largest tax cut for the individual top tax bracket — dropping it from 50 percent to 28 percent.
Though former President George H.W. Bush told voters during his 1988 campaign, “Read my lips: no new taxes,” both he and former President Bill Clinton raised taxes and increased revenue. With a budget surplus at the beginning of his presidency, former President George W. Bush enacted his first tax cut in 2001, reducing taxes by nearly $102 billion in today’s dollars in the first year. He increased those cuts in 2003.
His cuts were set to expire in 2010 during former President Obama’s presidency, but in December of that year, Obama announced a temporary two-year extension of Bush’s tax cuts. After the extensions expired, Obama signed into law a new tax plan that increased the rate for the top tax bracket.
Many details of Trump’s tax proposal remain unclear, as the White House so far has only provided a one-page handout of less than 250 words. But Democrats are already questioning the proposal.
While the details of Trump’s tax cuts remain to be seen, when it comes to understanding past modern presidential tax cuts, at least you can say, “Now I get it.”