The Tax Reform Act of 1986 is one of Reagan’s crowning achievements. Widely known as one of his two biggest tax cuts, every good conservative knows that this heroic act of Ronald Reagan simplified the tax code, lowered taxes, and therefore lead to prosperity, success, wealth, sunshine, unicorns, and basically has been the root cause of every single good thing that happened in the 1990’s. Some people say that Clinton is responsible for the budget surplus during Bill Clinton’s term as President… but we know better! It was the 1986 Reagan Tax Cuts!
Yet somehow… something seems very wrong with this graph.
According to this graph, in the years following the enactment of the 1986 Tax Reform Act, the effective tax rate (that is, the percentage of income actually paid by people, after all loopholes, breaks, deductions, and other fancy stuff has been applied) of the bottom 80% of income earners (red, green, blue, and yellow lines) went down… but the effective tax rate of the top 20% of income earners actually went up!
How is this possible? Could it be that somehow, in some unknown sinister way, Reagan actually increased taxes on the rich??
It turns out that sneaky little things like an increase in the Capital Gains tax, a strengthening of the Alternative Minimum tax, and the closing of loopholes and deductions are responsible for this “effective tax rate” increase. The end result was that although the official tax rates for the richest people in the country went down, the wealthiest people in the country ended up actually paying a higher percentage of their income as tax.
This kind of graph can lead to all kinds of trouble.
For example, an evil liberal might look at this graph and say: “Obama has proposed closing loopholes so that the wealthy pay more in taxes. If Reagan did it, then why don’t conservatives want Obama to do it?”
Or, an anti family, anti-values liberal might look at this graph and say: “Obviously, the wealth of the Reagan years didn’t trickle down, but was actually taken from rich people through increased taxes!”
Or, a nature-worshipping, un-American liberal might look at this graph and say: “This shows that Reagan actually never decreased taxes on the wealthy, as is usually claimed. His policies were exactly the same types of tax changes that Republicans are now calling class warfare… now that Obama wants to do it.”
WHAT IS WRONG WITH YOU, REAGAN TAX CUTS? WHY ARE YOU SO MESSED UP?
Clearly, this graph cannot represent reality. Instead, it is another example of statistics that have been infected with liberal bias!!!
Graph Data Source: Econ Data Us
Graph Found Via: US Budget Blog