By Ryan Ellis
It’s fair to say that comments made by Senator Marco Rubio (R-FL) about the corporate tax reform in the Tax Cuts and Jobs Act have created quite the scrape between the pro-growth and pro-family/middle class wings of the tax cutting movement.
It’s also important to note that there’s plenty of blame for this feud to go. For every ill-advised musing by the Republican senator about cutting the corporate tax rate too deeply, there’s a volley from the Wall Street Journal editorial page taking a swipe against the child tax credit.
Each side needs to recognize, once and for all, that they need each other. Going back to the Kennedy tax cuts of 1964, and all the way through President Trump’s “Tax Cuts and Jobs Act” last December, we have a clear and unbroken record of successful tax legislation which is both pro-growth and pro-family/middle class. Interestingly, we have zero examples of successful tax laws which are all one or all the other. No doubt, each side would view their half of the equation as less than fully served each time. But indeed, progress has been made on all fronts over time.
Below is a list of the major tax bills and what each side “got.” This is not meant to be exhaustive, but rather to touch on the first tier elements of each law and how they helped each side of the tax cutting coalition.
Pro-Growth Tax Cuts Pro-Family Middle Class Tax Cuts
Kennedy tax cuts Cut the top personal rate Cut the corporate tax rate from 52%
from 91% to 70%. to 48% Created a “zero bracket”
Cut all tax rates across the board, equal to the greater of 10 percent
including cutting the lowest rate of AGI or $8000 for a large family
from 20% to 14%. plus personal and dependent
exemptions of $4800 per person
(adjusted for inflation)
1978 Revenue Act Cut the capital gains tax rate Increased personal and dependent
from 40% to 28%. Cut the exemptions and increased
corporate income tax rate from the standard deduction
48% to 46%.
1981 Economic Cut the top personal rate from Cut tax rate for all tax brackets
Recovery Tax Act to 50%. Cut the capital gains rate and indexed tax brackets to inflation
from 28% to 20%. Depreciation Cut lowest tax bracket from 14% to
1986 Tax Cut the top personal rate from Increased standard deduction to
Reform Act 50% to 28%. Cut the corporate $11,000 for married couples and
tax rate from 46% to 34%. increased personal and dependent
exemption to $4500 (adjusted for
inflation). Millions of families taken off
the tax rolls.
1997 Taxpayer Cut the capital gains tax rate from $500 child tax credit created.
Relief Act 28% to 20%. Roth IRA created. Education tax credits created.
Capital gain exclusion on the sale of
middle class homes.
2001-2003 Bush Top personal rate reduced from Child tax credit doubled from
Tax Cuts 39.6% to 35%. Capital gains tax rate $500 to $1000. Marriage penalty
reduced from 20% to 15%. Death eliminated in low brackets and
tax phased out. standard deduction. 10% lowest
2017 Tax Cuts Top personal rate reduced from Child tax credit doubled from
and Jobs Act 39.6% to 37%. Corporate tax rate $1000 to $2000. Standard deduction
reduced from 35% to 21%. doubled to $24,000 for married
Temporary full business expensing. couples. Large working and middle
Hybrid territorial tax system. class tax rate cuts
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