Do Tax Increases Reduce the Deficit?

On June 26, 2012, in Uncategorized, by consinfo_user

Virginia Congressman Gerry Connolly, in a June 5 speech supporting tax increases as a way of fighting the deficit, pointed out that President Ronald Reagan signed into law tax increases in 1982, 1984, 1985, 1986, and 1987.

Connolly did not address the question of whether these tax increases reduced the deficit. Such facts would have been highly inconvenient to his argument. In 1982, when the first tax increase was passed, the Federal deficit was $128 billion. In 1988, Reagan’s last full year in office, the deficit was $155 billion. The tax increases never succeeded in getting it down to anywhere near $128 billion during Reagan’s two terms.

Reagan’s successor, George H. W. Bush, was persuaded to support a massive tax increase in 1990. The deficit, which had been $221 billion that year, increased to $$269 billion and $290 billion the next two years.

 

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