Sure looks like it, based on what the liberal radio host recently told his listeners.
Anyone listening to Thom Hartmann won't have to wait long for him to blame the malevolent political monster known as Ronald Wilson Reagan for nearly every pathology to befoul America in the last three decades -- which makes it all the more odd that Hartmann appears to have benefited considerably from Reagan's tax policies. (Audio after the jump)
I mean, I remember when Reagan dropped the capital gains tax by like 15 or 20 percent, something like that, in '86, Louise (Hartmann's wife) and I sold a business because the capital gains tax had changed, or was going to go up, Reagan was actually going to raise it back up again and it was going to go up and so we sold the business in the year we did rather than the year after when we really wanted to sell it because, you know, it would have saved us a few tens of thousands of dollars.
I'll give Hartmann the benefit of a doubt that the decades since these policy changes took place has fogged his recollection of their specifics. He is correct that Reagan initially cut the capital gains tax, but it was part of the sweeping tax cut plan in 1981, not the tax package in 1986. In the 1981 plan, the tax on capital gains was reduced from 28 to 20 percent, the lowest it had been since Herbert Hoover was president.
Five years later, Reagan pushed the capital gains tax back to 28 percent, which also became the maximum rate at which ordinary income would be taxed (down from 50 percent), as part of broader reform legislation. But before these changes actually took effect, according to Hartmann, he sold his business and saved himself "a few tens of thousands of dollars."
But those substantial savings to Hartmann and his wife doesn't take place -- without the capital gains tax getting cut by Reagan in 1981. Based on Hartmann's own admission, if he and his wife waited until the higher capital gains tax from the 1986 reforms took effect -- the pre-Reagan rate -- it would have cost them thousands of dollars. Then again, had the capital gains tax remained at 28 percent throughout the 1980s, perhaps Mr. and Mrs. Hartmann decide against selling their business, seeing how doing so will result in them sending a huge chunk of the proceeds to the IRS.
Hartmann's revelation is amusing for another reason -- it refutes one of the central tenets of liberal economics, which is that higher taxes are not a burden to businesses and do not cause significant changes in how they are run. But when it's a liberal facing the reality of much higher taxes if he sells his business next year instead of this, he sells it this year. Any conservative doing the same, needless to say, is engaging in tax avoidance.
