Treasury Secretary Steven Mnuchin says the Trump administration wants to secure the largest tax cut in history, in part by cutting business tax rates from 35% to 15%. How Mr. Trump's proposed tax cuts stack up against others is shaped by how they are measured and structured and how they played out. Each was different in important ways and the structure of Mr. Trump's plan remains a work in progress.
Here is a look at major tax law changes in the U.S. postwar period:
KENNEDY 1963: INDIVIDUAL AND CORPORATE RATE CUTS
President John F. Kennedy proposed a tax cut in 1963 that Congress ultimately passed as The Revenue Act of 1964, which was signed into law by President Lyndon B. Johnson. Its signature provision was a cut in the top individual tax rate to 70% from 90% and a cut in the corporate rate to 48% from 52%.
How it measures up: The bill cut taxes by $11.5 billion over the first year, or around $91 billion after adjusting for inflation. As a share of national income, the Kennedy tax cut's first-year tax reduction is the largest, at around 1.9% of national income and 8.8% of the federal budget at the time, according to the Tax Foundation think tank.
REAGAN 1981: LARGE INDIVIDUAL RATE CUTS
President Ronald Reagan further lowered the top marginal rate to 50% from 70% and phased in a 23% average cut across individual tax rates over three years. He also sharply reduced estate taxes, trimmed taxes paid by corporations and indexed the tax-code parameters for inflation. The bill was signed into law in August 1981.
How it measures up: It cut taxes by $38.3 billion over the first year, or $102 billion in today's dollars, and by even more in subsequent years. In 1982, Congress rescinded some of the reductions and raised corporate rates because deficits rose following the 1981 cuts. In inflation-adjusted dollars, the 1981 tax cut is the largest reduction since the 1964 cut. The first year of the cut was equal to around 1.4% of national income and represented 5.3% of the federal budget.
REAGAN 1986: DEFICIT NEUTRAL TAX OVERHAUL
The Tax Reform Act of 1986 is considered to be Mr. Reagan's second tax cut, even though the bill was revenue neutral, meaning it offset tax cuts for individuals by eliminating certain tax preferences and shifting certain tax burdens to corporations. It cut the top tax rate for individuals to 28% from 50% and raised the bottom rate to 15% from 11% while combining many lower-level tax brackets. It also reduced the corporate rate to 34% from 46%.
How it measures up: While the 1986 overhaul didn't result in a net tax cut, it is widely considered to be the most comprehensive set of changes to the tax code enacted at one time. The changes were reached on a bipartisan basis that stemmed largely from proposals the Reagan Treasury laid out in 1984.
BUSH 2001-03: TEMPORARY TRIMMING
President George W. Bush secured a series of tax cuts in 2001 and 2003. It trimmed marginal tax rates, reducing the top rate to 35% from 39.6%, and it increased the standard deduction for married couples filing jointly. The first tax cut was signed into law in June 2001 and many provisions were phased in over several years. Mr. Bush signed a separate tax bill in May 2003 accelerating some of the 2001 provisions and further reducing taxes on dividends and capital gains. The changes were passed using a legislative tactic that didn't allow Congress to add to deficits beyond a decade. As a result, they were set to expire at the end of 2010. Congress extended several major provisions but allowed others, including the cut in the top marginal rate, to expire.
How it measures up: The 2001 legislation cut taxes by $73.8 billion in the first year, or $102 billion in today's dollars. It is smaller than both the Reagan and the Kennedy tax cuts as a share of national income, at around 0.8%. The cut represented around 3.8% of the federal budget.
Write to Nick Timiraos at email@example.com
(END) Dow Jones Newswires
April 26, 2017 17:33 ET (21:33 GMT)