Friday, April 10, 2015

Three Pinocchios for Rand Paul: The Campaign Season Begins!

Rand Paul’s claim that Reagan’s tax cuts produced ‘more revenue’ and ‘tens of millions of jobs’ equals three-fourths of a ‘whopper’

By Glenn Kessler April 10 at 3:00 AM, WashPost

“The last president we had was Ronald Reagan that said we’re going to dramatically cut tax rates. And guess what? More revenue came in, but tens of millions of jobs were created.” – Sen. Rand Paul (R-Ky.), interview with Sean Hannity of Fox News, April 7, 2015

Rand Paul’s quote is emblematic of some of the mythology that has sprung up around Reagan’s tax policies — specifically what he did and its impact. Economists will forever debate the impact, and Paul is certainly entitled to his opinion that Reagan’s tax cuts led to a booming economy.

But certainly his numbers can be checked. First, did the tax cuts lead to more revenue? And were tens of millions of jobs created?

The Facts

When Ronald Reagan became president in 1981, individual tax rates were as high as 70 percent. His first tax cut, the Economic Recovery Tax Act of 1981, slashed the top rate to 50 percent—and then a 1986 tax overhaul brought the top rate down to 28 percent. Those were certainly dramatic changes, though as we shall see, Reagan also raised taxes repeatedly.

The jobs part of our query is easy to answer. As readers know, The Fact Checker frowns on attributing job gains to a single president; the business cycle, the Congress, the Federal Reserve and the ingenuity of private enterprise are all important factors. But with that caveat in mind, let’s look at job creation during presidential terms.

(More here.)

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