- Days left

Michele Bachmann Proposes Tax Hikes for Everyone -- Reagan Style

×
Michele Bachmann Proposes Tax Hikes for Everyone -- Reagan Style On Thursday morning, presidential candidate Michele Bachmann may have inadvertently made one of the boldest moves of the 2012 GOP primary campaign. Speaking on Fox News, the Minnesota congresswoman stated that she wants to adopt Ronald Reagan's tax plan, a rate structure that is much higher than current tax rates.

Criticizing Herman Cain's catchy-sounding 9-9-9 tax plan, Bachmann offered her own economic proposal, which she emphasizes has "not only a tax plan in it, but has a jobs and economic recovery plan." After sending viewers to her website, she explained the inspiration for her proposal: "For my tax plan, I take a page out of one of my great economists that I admire, Ronald Reagan. And under my tax plan, I want to adopt the Reagan tax plan. It brought the economic miracle of the 1980s." A few moments later, she reiterated her point, emphasizing, "I want to re-institute the Reagan tax model from the 1980s."



Within hours, Talking Points Memo and other media outlets across the country were reporting her apparent break with the Republican mainstream on taxes. The Bachmann campaign has not replied to repeated requests for clarification.

It's not hard to understand why Bachmann repeatedly invoked the Gipper: Among contemporary Republicans, Reagan's massive 1981 tax cut is legendary. When he came into office, the top tax rate of 70% kicked in at $108,300 and the median household paid 34%. Within a year, he had dropped taxes sharply: The top rate -- which fell on people who made $41,500 or more -- was down to 50%, and the tax rate paid by median households had dropped to 31%. By the end of the Reagan presidency, the wealthiest taxpayers and median households were paying the same rate: 28%.

But while Reagan's tax initiatives have gained near-totemic power among conservatives, the truth is that most taxpayers now pay even less than they did in the eighties. A single payer making the median household income of $49,445 pays 25%, and a payer in the highest tax bracket -- which kicks in at $373,650 -- pays 35%. On the surface, Bachmann's proposal to revert to the Reagan-era tax code would translate into a 3% to 9% tax increase on median households, while the richest taxpayers would face a tax change ranging from a 7% drop to a 35% rise.

The Big Picture: Even The Rich Would Pay More

But the basic tax rate only tells half the story. While cutting income tax, Reagan also raised taxes by closing loopholes and ending many tax breaks; for that matter, he increased levies on many consumer products, including gasoline and cigarettes.
To get a more complete picture of the tax structure, both under Reagan and in our own time, it's helpful to look at the total effective tax rate, a measure of the complete tax levy on most taxpayers.

Through this lens, Bachmann's tax boosting proposal seems even more impressive. During the Reagan years, the total effective tax rate ranged from 29.2% to 30.7%. By comparison, today's rate is 27.7%. In other words, depending upon which year of Reagan's presidency one considers, Bachmann's proposal would raise taxes by between 1.5% and 3%, across the board.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Intro to Retirement

Get started early planning for your long term future.

View Course »

TurboTax Articles

What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

Add a Comment

*0 / 3000 Character Maximum

336 Comments

Filter by:
Richard

Its nothing to get alarmed at -- She doesn't have a clue as to the Tax. She only thinks that if you say "Reagan" -- Its magic to the soggy baggers.

October 23 2011 at 4:22 PM Report abuse rate up rate down Reply
capenv

I'd love to see Michelle naked.

October 22 2011 at 2:31 AM Report abuse rate up rate down Reply
savemycountry911

AOL is locking me out. Here is my "last song"

I hear the lib train comin. It's comin round the bend.
I ain't seen so much stupid since I don't know when.
Obama's stuck on Socialism and the waste goes on.
We'll oust him next election and we'll send him home.
(Kenya, Chicago, his 57th state? We don't care)
His Hope and Change fiasco, now it was just a lie.
When libs find out he's goin, they'll hang their heads and cry.

Tissue?

October 21 2011 at 8:40 PM Report abuse +2 rate up rate down Reply
Jim

your all wrong CLINTON GAVE THE RCH A TAX FREE TABLE AND AFTER SO MUCH HE TAX ALL AT 10 PERCENT

October 21 2011 at 5:35 PM Report abuse +1 rate up rate down Reply
gttdux

Buy "Made in America" and the next time a Steve Jobs type character comes to the whitehouse for a heart to heart with Obama, give him an American made hot dog for his meal so he can realize what the 99% eat if they are lucky.

October 21 2011 at 12:04 PM Report abuse rate up rate down Reply
1 reply to gttdux's comment
savemycountry911

Yea, lets punish the productive.

October 21 2011 at 3:32 PM Report abuse +1 rate up rate down Reply
vicla1942

wE NEED TAX INCREASES BECAUSE OF BUSH'S IRRESPOBNSIBLE BEHAVIOR ABN D CONGRESS FAILURE TO STP 8 YEARS OF RECKLESS SPENDING AND A FINANCIAL COLLAPSE. WE NEED INCOME INEQUALITY TO EVEN OUT BY TAXING THE WEALTHY AND REDISTRIBUTION

October 21 2011 at 9:55 AM Report abuse +1 rate up rate down Reply
1 reply to vicla1942's comment
savemycountry911

It didn't take Obummer 8 years to trash the US

October 21 2011 at 3:32 PM Report abuse +2 rate up rate down Reply
gmydogbud

Has this woman lost her mind? The average worker, had no increases for a two year period, under President Ronald Reagen, while those in management continued to receive increases and this caused the workers to fall behind and as though that was not enough, when workers started to receive increases, they were very, very small. I doubt that the people of the United States, would put up with this again. It looks as though, those in Government., are of the "LET - THEM - EAT - CAKE", mind set & we all know what happened to - Little Miss Marie !!

October 20 2011 at 9:55 PM Report abuse +2 rate up rate down Reply
sal8110

Bruce- You picked the wrong date. After Reagens full across the board, 3 years to impliment, 28% was the top rate.

October 20 2011 at 4:43 PM Report abuse rate up rate down Reply
gitarman12

I thought she was the Tea Party poster girl? Now she wants to raise taxes. Three months ago she was slamming Obama for taxing 'the people". Now her poll numbers are dropping, so she comes back down to reality. What a sham candidate she is.

October 20 2011 at 9:04 AM Report abuse rate up rate down Reply
rparis8241

she doesn't have a clue what she is doing she should go get her nails done again.

October 20 2011 at 12:56 AM Report abuse rate up rate down Reply