Eagle Forum Legislative Alerts

Wednesday, August 13, 2014

The Biggest Tax Cut in History

Thirty-three years ago today, on August 13, 1981, President Ronald Reagan signed into law the biggest tax cut in history. Named the Economic Recovery Act of 1981, this bold legislation allowed Americans to keep hundreds of billions of dollars which they would have otherwise had to pay to the federal government. This law slashed individual tax rates so that working people could save or spend their money as they thought best. This tax cut was a revolutionary concept in 1981 because we then had high unemployment, inflation, and expanding government. Some business leaders at the time actually opposed the tax cut for individuals, but Reagan converted the Republican Party from a party of big business to a party for the people.

Reagan signed this landmark legislation not in Washington, D.C., but out in the hills of California, on his ranch. Amid a morning fog and smattering of the press who trekked out to witness this historic event, Reagan joked with the reporters as he placed our nation on a path of phenomenal economic growth. The Reagan tax cut created 20 million new jobs, and the net worth of the middle class grew by 27% annually. Contrast that with the policies of the Obama Administration, during which the net worth of the middle class has fallen, with 85% of the middle class now saying that it is more difficult for them to maintain their standard of living than it was 10 years ago.

In addition to cutting individual tax rates from a high of 70% to 50%, President Reagan’s landmark law created incentives for savings and small businesses, the engine for job growth. Good legislation is rare. The big tax cut signed by President Reagan 33 years ago today is worth remembering and imitating.

Listen to the radio commentary here:

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