In the coming weeks, you'll hear Republicans doing two things: Invoking Ronald Reagan, and arguing for more tax cuts.
As you hear this, bear in mind the following. When Reagan took office in 1981 committed to cutting taxes, the top marginal tax rate in the United States was 70%. It had been since 1964, when it was reduced from 91% (!). By the way, this does not mean of course that 91% of top earners' income was confiscated. This was the top marginal rate, meaning that all income earned over a certain amount was taxed at that rate.
So yes, 91% of those earnings were taken in tax, but the figure was so high -- $400,000, which I'd imagine precious few people earned then -- as to impact a very small portion of the people (and remember, "earned" in income as opposed to, say, cleared via investments; investments were taxes at lower rates). But LBJ lowered it to 70%, and there it stayed, more or less, through two Democratic and two Republican presidents, until Ronnie. Look at this useful chart.
In 1981, it was cut to 50%. In 1986, it was cut again to 28%. Bush 41 raised it, and so did Clinton, so that by 2000 it was 39.6%. It's now 35%. (I gather that your top marginal rate is 40%). And that's on income over $311,950 for a married couple filing jointly – meaning, again, that only every dollar earned above that amount is taxed at that rate.
In other words, people are paying a helluva lot less in taxes these days than they were in Reagan's day. Now, other business taxes and so forth I know less about, and negotiating some decreases there may be fair. And Obama is obviously going to have to increase the $275bn in tax cuts in the stimulus bill, a little, just for the sake of compromise, so Republicans can say they got something and vote for it.
But when you hear Republicans talking about Reagan and tax cuts, remember the above numbers. Even some conservatives, like David Frum, acknowledge that as far as personal income goes, there's really no more tax-cutting that can plausibly be done.
