When I was younger this is how the Senate worked:
On September 27, 1986, the US Senate voted by a lopsided margin to overhaul the tax code to the benefit of the extremely rich. The act, the second of the two major Reagan tax cuts, was written by Democratic Senator Bill Bradley of New Jersey and Democratic Representative Richard Gephardt of Missouri, and was signed into law by President Ronald Reagan on October 22, 1986. It was the first major alteration in US tax law in 40 years.
The law cut the income tax rate on the wealthiest Americans from 50 to 28 percent, while simultaneously increasing the tax rate on the poorest citizens from 11 percent to 15 percent. Tax brackets were reduced from 15 to four, and the top corporate tax rate was slashed from 46 percent to 34 percent. The law included a bevy of other measures punishing the poor and low-income workers, including abolishing interest deductions for debt on consumer loans such as credit cards and tightly restricting deductions for Individual Retirement Accounts (IRA).
The 74-23 Senate vote saw 33 Democrats vote in favor of the bill, many of them leading liberals, including senators Kerry and Kennedy of Massachusetts, Gore of Tennessee, Leahy of Vermont, Biden of Delaware, Proxmire of Wisconsin, Glenn of Ohio, Moynihan of New York, Lautenberg of New Jersey, and Harkin of Iowa. Only 12 Democrats, together with 11 Republicans voted against the bill, which was championed by the Reagan administration.
How could we recapture the idealism of the 1980s? This is how:
…we propose an X tax, consisting of a flat-rate firm-level tax on business cash flow and a graduated-rate household tax on wages. The tax would completely replace the individual and corporate income tax, the estate and gift taxes, and the Unearned Income Medicare Contribution tax slated to take effect in 2013.
This is basically a progressive consumption tax. The GOP gets the hated personal and corporate income taxes abolished, and GOP gives in on higher revenues and a fairly progressive tax on wage income (and hence consumption.)
I know what people will say; “Look at the bi-partisan vote in 1986. That was before the US became a banana republic.” Yes, but one can’t help dreaming that someday our representatives might start actually trying to help the country.
Younger blog readers who rely heavily on the NYT for information might be under the impression that the 1980s tax cuts for the rich were enacted due to the evil Republicans. Actually, almost every single developed country cut its top MTR during the 1980s and 1990s. And liberal Democrats in America also supported the cuts. The past is another country—you had to be there to understand.
HT: Tyler Cowen