Democratic Super PAC Pulls the Reagan Card On Millionaire’s Tax

Dec 9, 2011 4:52pm

A presidential bus tour, a handful of failed Senate votes and a plethora of pleading speeches have all failed to convince most Republicans to support a tax increase on millionaires.

Now President Obama’s Super PAC has pulled out the last trick in the bag: Ronald Reagan.

An ad released Wednesday by Priorities USA, a Democratic group that is not officially associated with the president’s campaign, splices together clips of Reagan saying millionaires should pay “their fair share.”

“We are going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,” Reagan says in the clip. “They sometimes made it possible for millionaires to pay nothing while a bus driver was paying 10 percent of his salary and that’s crazy. Do you think the millionaire ought to pay more in taxes than the bus driver?”

The ad, which will air in Iowa for the next two weeks, finishes with an announcer saying: “Ronald Reagan supported millionaires paying their fair share. Don’t you?”

But what the ad cuts out are the portions of that Reagan speech in which the former president says “no one, or just about no one, is saying we ought to raise taxes.” Indeed, Reagan mentions lowering taxes in almost every economic speech he made.

The ad comes amid a fierce battle on Capitol Hill on extending and expanding the payroll-tax cut. Democrats are calling for the middle-class tax cut to be offset by a 2 percent, 10-year tax increase on people earning more than $1 million.

Republicans are staunchly opposed to the tax increase that, as Utah Sen. Orrin Hatch said, was a “permanent tax hike on small businesses to pay for temporary one-year tax policy.”

The Priorities USA ad, though, is not entirely off-base. Reagan did support simplifying the tax code by eliminating many of the loopholes that benefit upper-income Americans and large corporations.

Under his tenure, tax credits for oil and gas companies were cut and he plugged loopholes that he said allowed some corporations to pay no federal income taxes.

By eliminating these deductions, Reagan was able to lower the overall tax rate 41 percentage points, from 69 percent when he took office in 1981 to 28 percent when he left in 1989, under revenue-neutral changes.

“Reagan got rid of a lot of the underbrush that we have in the tax code that reduces tax liability, which is something economists generally believe in,” said Roberton Williams, a senior fellow at the Tax Policy Center. “A broad base with low rates is good tax policy.”

While Republicans most often herald Reagan’s policies and particularly his tax policies, Williams said neither party’s proposals line up with Reagan’s, which he said most mirror the Bowles-Simpson tax plan.

The Bowles-Simpson plan calls for cutting $3 worth of spending – including entitlement funding – for every $1 of tax increases.

“A lot of the Republican proposals lower rates and not do very much with the base and Democrats want to raise the tax rate but leave all the expenditures in place,” Williams said. “That’s why there was no jumping on the bandwagon with the Bowles-Simpson report. On the one hand, people said we want the lower rates but don’t take away tax benefits, while others are saying we need to hit high-income folks more.”

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