Not too long ago, late night host Stephen Colbert was talking with Texas Senator Ted Cruz. He said President Reagan “reversed his world’s ‘largest tax cut’ and raised taxes when revenues did not match the expectations.”
Is that a fact?
Stephen Colbert, of course, hosts CBS’ “The Late Show.”
When did he have Sen. Cruz on as a guest?
Colbert has had several Republican presidential hopefuls on the show – Cruz, appeared on September 21. During his appearance, he tangled with Colbert about President Reagan, who’s oft hailed on the right as an iconic leader, in part because he got Congress to slash taxes.
We’ve got the key sound clip here, first of Cruz extolling Reagan, and then Colbert checking his facts. So, I assume the point at issue is whether Reagan “reversed his world’s ‘largest tax cut’ and raised taxes when revenues did not match the expectations.”
Yes, reporter Katie Sanders, who’s with the PunditFact team, looked into whether Reagan shifted course on his tax cuts after economic growth slowed. Turns out that Cruz was correct about the big tax cut – It was the Economic Recovery Tax Act of 1981, which had a $38 billion phased-in cut ($99 billion in 2015 dollars). This included cuts of about 30 percent in income tax rates.
But the president signed tax hikes into law as well?
Two increases, one in 1982 and the other in 1984, closed tax loopholes to generate revenue – yet didn’t raise rates. According to experts including former Reagan adviser Bruce Bartlett, the ‘82 increase (amounting to $150 billion in current-day dollars) was probably the largest peacetime tax increase in American history. At the time, pressure was high to attack the federal deficit and there also were concerns Reagan’s tax-cutting was resulting in too little in revenue.
See more about Colbert’s Truth-o-meter rating here.