In the latest attempt to sell President Obama's surtax on millionaires, liberal group Think Progress has released a video of Ronald Reagan, which it claims shows him "supporting the principle behind the Buffett Rule." It's a nice try at resurrecting the conservative icon to suggest he would be in agreement with Obama, but the broader context tells a different story.
Yes, it’s true that on June 28, 1985, Reagan gave a speech to Bloom High School in Chicago Heights, Illinois about problems with the tax code in which he told an anecdote about an executive who was paying a lower tax rate than his secretary. But if you read the whole speech, it’s clear that Reagan was telling the story as part of his pitch for tax reform.
“Lower, flatter tax rates will give Americans more confidence in the future,” Reagan said that day. “It'll mean if you work overtime or get a raise or a promotion or if you have a small business and are able to turn a profit, more of that extra income will end up where it belongs -- in your wallets, not in Uncle Sam's pockets.”
So there are several key differences with Obama. To start, Reagan was talking about simplifying the tax code, whereas Obama’s Buffett Rule would add another layer of complexity. Reagan was arguing for allowing people to keep more of their own money and reduce the burden of government. By contrast, Obama is arguing for instituting the Buffett Rule so that more money is available to pay for government programs.
Reagan’s push for tax reform helped lead to landmark reform legislation the following year that broadened the tax base, consolidated the nation’s 14 brackets into just two and lowered the top marginal income tax rate from 50 percent to 28 percent. This is actually pretty close to the framework that Rep. Paul Ryan, R-Wis., outlined in the House GOP budget and couldn’t be more far off from Obama’s Buffett Rule gimmick.