Republicans are already claiming the President’s deficit reduction plan is the largest tax increase in history. But unfortunately for them, the facts don’t back them up. Drawing straight from their source, here are the facts:
- The Treasury Department working paper they’ve referenced compares the first four years of tax changes.
- They are using “inflation adjusted dollars,” which is an incorrect measure. Our economy is more than twice the size it was in the mid 1980s in inflation adjusted dollars. That means an identical tax change would be twice as large today in inflation adjusted dollars as in 1985. The correct measure should be “as a percentage of GDP,” as the working paper itself suggests:
- “The single best measure for most purposes is probably the revenue effect as a percentage of GDP, because it eliminates the effects of inflation, real economic growth, and the size of total federal receipts.”
- Conveniently, the Treasury Department working paper they’ve referenced does measure tax changes as a percentage of GDP. By this single best measure, the largest tax increase in modern history was under their conservative hero, President Ronald Reagan, in 1982, and was 25% larger than President Obama’s proposal.
It’s time for Republicans to get serious about creating jobs and reducing the deficit. Rather than protecting tax breaks for the wealthiest Americans, we hope Republicans will work with us on the President’s balanced plan to create jobs, reduce the deficit and ensure all Americans pay their fair share.