The Corner

Reminder: Reagan Was for Tax Relief for Families, Not Just Rate Cuts

It’s become an article of faith among the uber-supply-siders to criticize any tax reform plan that includes expanded child tax credits. The idea that families need tax relief to help them raise their children doesn’t rate with them. Instead, they argue against such measures saying that tax credits don’t help the economy much and the money spent on them could be better used to further cut the top rate. One such example is a recent Wall Street Journal staff editorial arguing that Marco Rubio’s proposal to add a $2,500 child tax credit to the code “wouldn’t do much for growth” and represented “use of the tax code for social policy.”

To paraphrase someone we all know and revere, “there they go again.”

These apostles for marginal-rate reduction are rejecting the principles of the man who started tax reform in the first place, Ronald Reagan. Reagan explicitly campaigned for a doubled personal exemption in his signature reform proposal, which became the 1986 Tax Reform Act on the grounds that favoring families was good social policy. Indeed, in his speech on the occasion of signing the 1986 Act, Reagan said:

It’s in our families that America’s most important work gets done: raising our next generation. But over the last 40 years, as inflation has shrunk the personal exemption, families with children have had to shoulder more and more of the tax burden. . . . [With this bill] families will get a long-overdue break with lower rates and an almost doubled personal exemption. We’re going to make it economical to raise children again. (Emphasis added)

Reagan’s campaign for tax reform, which he started in 1985, always emphasized tax fairness as much, if not more, than cutting the rates to help entrepreneurs. His original proposal always included the vastly expanded personal exemption, and also included proposals to double the amount families could contribute to their IRAs and increase the EITC maximum from $550 to $700.

Maybe Reagan was wrong to prioritize helping families and the working poor at the same time as he was lowering rates and broadening the base. But if we as conservatives are going to say he was wrong, we should explicitly acknowledge that we are parting company with the Gipper.

Henry OlsenMr. Olsen is a senior fellow at the Ethics and Public Policy Center, an editor at UnHerd.com, and the author of The Working Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism.

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