Read this, then ask yourself: Isn't it amazing the riots haven't started yet?

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Reagan fooled people with his bullshit tax increases. Yeah, he increased revenue, but it was on the backs of low-income Americans and seniors, including taxing unemployment benefits.

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Another Reagan proposal that came in for criticism was the plan to tax all unemployment compensation. At present, such compensation - stemming from a job-related injury or illness - is taxed only if the recipient's adjusted gross income exceeds $12,000, or $18,000 for a married couple filing jointly.

http://www.nytimes.com/1985/05/30/business/reagan-s-tax-plan-one-way-or-another-plan-will-touch-just-about-everyone.html

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During the 1970s, some policy studies had shown that the proportion of wages replaced by UC benefits on an after-tax basis was large enough to erode a claimant’s work incentive.8 Taxation of UC benefits served to reduce the degree of after-tax wage replacement and reduce the work disincentive effect. However, UC benefits of lower-income claimants remained untaxed because their total income was under the tax threshold (i.e., their standard deduction and personal exemptions offset their income).

In 1982, Congress lowered the AGI thresholds for taxation of UC benefits. The Tax Equity and Fiscal Responsibility Act of 1982 (P.L. 97-248) reduced those thresholds to $12,000 for single filers and $18,000 for joint filers.9 A primary motivation of this legislation was to raise revenue, but it left in place a policy of protecting lower-income claimants from taxation of UC benefits.10

Congress made UC benefits fully taxable in the Tax Reform Act of 1986 (P.L. 99-514), effective for benefits received after December 31, 1986. Although this action reversed the original policy of taxing UC benefits only above an AGI threshold, it occurred in the context of a law that removed many low-income filers from the tax rolls, lowered the marginal tax rates for the majority of taxpayers, and expanded eligibility for the earned income credit. The rationale for full taxation of UC benefits was to treat UC benefits the same as wages and to eliminate the work disincentive caused by favorable tax treatment for UC benefits relative to wages.11

Concern about claimants’ cash flow problems caused by the lack of tax withholding from UC benefits arose during the 1990-1991 recession. P.L. 102-318 required states to inform all new claimants of their responsibility to pay income tax on UC benefits and to provide them with information on how to file estimated quarterly tax payments. In 1994, P.L. 103-465 required states to withhold federal income tax from UC benefits if a claimant requested withholding, and permitted states to withhold state and local income taxes. P.L. 103-465 set the federal withholding rate at 15% of the gross benefit payment amount. The federal withholding rate was changed to 10% by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107- 16) effective August 7, 2001.

https://www.fas.org/sgp/crs/misc/RS21356.pdf

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Q3. Which political party started taxing Social Security annuities?

A3. The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.

The basic rule put in place was that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer's total income exceeded certain thresholds.

The taxation of benefits was a proposal which came from the Greenspan Commission appointed by President Reagan and chaired by Alan Greenspan (who went on to later become the Chairman of the Federal Reserve).

The full text of the Greenspan Commission report is available on our website.

President's Reagan's signing statement for the 1983 Amendments can also be found on our website.

A detailed explanation of the provisions of the 1983 law is also available on the website.

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http://www.ssa.gov/history/InternetMyths2.html

The top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15%. [4] Many lower level tax brackets were consolidated, and the upper income level of the bottom rate (married filing jointly) was increased from $5,720/year to $29,750/year. This package ultimately consolidated tax brackets from fifteen levels of income to four levels of income.[5] This would be the only time in the history of the U.S. income tax (which dates back to the passage of the Revenue Act of 1862) that the top rate was reduced and the bottom rate increased concomitantly. In addition, capital gains faced the same tax rate as ordinary income.

http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986