White House chief of staff Donald T. Regan ratified one popular view of President Reagan and blew another out of the water last week when he said the administration wanted to lower the top income-tax rate for individuals to 27 percent even if this meant higher taxes for corporations.
Regan's comments -- refreshingly delivered on the record in contrast to the usual White House practice of going on "background" to say, for instance, that tomorrow is Tuesday -- reflected the president's longtime fear and loathing of income taxes. But they also demonstrated that Reagan isn't necessarily the trusty pal of "big business" described by his critics.
Like many of his fellow Americans, the president is practical rather than theoretical. The ideas he takes most seriously were formed outside the classroom, in the crucible of personal experience.
When Reagan was growing up in small-town central Illinois in the 1920s, his parents were too poor to be bothered by income taxes, paid in those days by the rich. The pain that the federal income-tax system could inflict on the well-to-do did not become apparent to Reagan until his Hollywood film career made him wealthy two decades later.
When this happened, in the mid-1940s, Reagan was a liberal Democrat who talked about "an individual depreciation allowance" that would provide individuals some of the tax breaks then enjoyed by oil companies. As his political views changed, Reagan stopped quoting Franklin D. Roosevelt's denunciations of the "malefactors of great wealth" and renounced the soak-the-rich views he had espoused in his New Deal phase.
Even after he became a conservative Republican, Reagan remained more the candidate of Main Street than of Wall Street. His friends tended to be self-made entrepreneurs, who had struck it rich in southern California, rather than corporate tycoons. Reagan never quite became the choice of the board rooms, where the preference in the early stages of the 1980 campaign was for another ex-Democrat, John B. Connally.
Reagan's populist streak revealed itself in California, when he struggled as a novice governor to reconcile his antitax advocacies with the belated discovery that the state needed more revenue to pay bills. Reagan agreed to a progressive tax increase that significantly boosted bank and business rates. When this bill produced a huge surplus, he shrewdly tried to return some of it to the people. Told that this was unprecedented, Reagan quipped that California had never before had an actor as governor.
The dark side of Reagan's populism is his unwillingness to raise taxes to pay for the programs he supports. The political impulse that prompted Reagan to return the California surplus is now embodied in the federal deficit, which has quadrupled during his presidency. While responsibility for the deficit is shared by Congress, it roughly expresses Reagan's priorities of fattening the defense budget, trimming social programs and cutting the devil out of income-tax rates.
As a second-term governor of California, after campaigning against "welfare cheats," Reagan and Democratic legislative leaders fashioned a bill that reduced welfare fraud and boosted grants of the poorest recipients. It was a political masterstroke for Reagan, who subsequently used the increases to rebut charges that he is insensitive to the poor.
As a second-term president, Reagan has done it again. The pending tax bill would eliminate taxes for 6 million working poor, who were hit hard by the first-term budget cuts. Democrats support this, but their failure in 1984 to follow the wise counsel of Sens. Bill Bradley (D-N.J.) and Gary Hart (D-Colo.) and make tax reform a priority gave Reagan a chance to capture the issue.
Campaigning with his usual hyperbole in Alabama last week, Reagan discussed tax reform in populist terms and emphasized the advantages for ordinary Americans with few tax shelters. The tax bill, he said, was a triumph of "the people" over the "special interests" in Washington. It was a speech Reagan could have given as a liberal Democrat 40 years ago, when he first discovered that taxes could hurt.
Reaganism of the Week: Speaking to the Chamber of Commerce in Dothan, Ala., last Thursday, the president said, "Lately, I've had to have somebody else make out my tax bill. And you know something? Even after it's made out, I can't understand it."