President Trump unveiled his tax plan on April 26, after months of pledging to make drastic changes to the tax code. The Post's Damian Paletta explains why tax reform is so complicated. (Jenny Starrs/The Washington Post)

President Trump has promised to reveal the broad strokes of a plan to cut Americans' taxes this week -- a plan he says will be historic in scope.

"It will be bigger, I believe, than any tax cut ever. Maybe the biggest tax cut we've ever had," Trump told the Associated Press on Friday.

If Trump hopes to make good on that pledge, he'll have tough competition. The ambitious plan Trump put forward during the campaign is smaller, relative to the size of the economy overall, than the cut President Ronald Reagan enacted soon after taking office in 1981.

Proponents of a big tax cut say it is a straightforward way for Trump to win a political victory in Congress, giving Americans more money to spend and stimulating the economy with what is likely to be a popular policy.

Yet critics, including many conservative economists, warn that an aggressive reduction in taxes could force the federal government to borrow more to make up for the foregone money. The result would be more national debt and steeper interest rates, as the government competes with ordinary businesses and households for loans.

Here is a look at the largest tax cuts in modern American politics.


Truman

Just months after the Allied victory, President Harry S. Truman signed a bill that was projected to bring down taxes by the equivalent of 2.7 percent of gross domestic product, a measure of overall economic activity. Since then, only Reagan passed a larger tax cut relative to GDP, according to a report the Treasury Department published in 2006.

As it is difficult to compare tax cuts from one decade to another, because what a cut means for ordinary people can depend on how well they are doing financially. Likewise, taxes are typically assessed on some percentage of one aspect of the economy -- whether wages, sales, property or investments -- so an equivalent reduction in taxes will have a very different effect depending on the pace of economic activity overall.

For these reasons, comparing the size of a change in taxes to GDP gives a good approximate sense of the measure's significance at the time it was enacted.

Later in his presidency, Truman soured on the idea of cutting taxes. Although the war was over, he argued, the government needed money to help rebuild Europe, provide benefits to veterans and invest in domestic infrastructure. At the same time, Truman felt that policymakers should work to pay down the debts the government had accumulated during the war.

Despite Truman's objections, Congress enacted a second mammoth tax cut in 1948, decisively overriding Truman's veto. That bill was projected to reduce revenue by 1.9 percent of GDP, according to the Treasury report.

Johnson

Although President Lyndon B. Johnson signed the next major reduction in taxes in 1964, those cuts are often associated with President John F. Kennedy, who had advocated them forcefully before his assassination. Overall, the change was expected to reduce revenue by 1.6 percent of GDP, the report shows.

Johnson and Kennedy were Democrats, but the plan that Johnson enacted featured what would soon become a typical feature of Republican tax policy: a drastic reduction in taxes for the richest taxpayers. Johnson's signature reduced the marginal rate on their income from 91 percent to 70 percent.

Reagan

That was the direction Reagan pursued, arguing that bringing down marginal rates would make federal taxes more efficient. Allowing taxpayers to keep more of their income would encourage them to work and invest, increasing economic activity and resulting in more federal revenue to make up for some of the reduction in rates.

Reagan's tax cut was projected to reduce collections by 2.9 percent of GDP. Yet Reagan quickly retreated from that enormous cut, in part because the federal government was running short on money. By 1984, he had signed two significant bills increasing taxes, undoing roughly half of his initial cut.

Taking those measures into account, Reagan's reductions in taxes were similar in size to those enacted by Johnson.

George W. Bush

Reagan's successors continued to raise taxes. Presidents George H.W. Bush and Bill Clinton both increased revenue, and those increases combined with a robust economy to create a budgetary surplus by the time Clinton left office.

President George W. Bush took advantage of the surplus to bring down taxes. He signed bills in 2001, 2002 and 2003 that were projected to reduce federal revenue by 0.7 percent, 0.1 percent and 0.5 percent, respectively, according to the Treasury report.

Obama

By the time Bush left office in 2009, the economy was in a severe recession, and President Barack Obama and Democrats in Congress enacted a substantial tax cut as part of their stimulus. The bill was projected to bring down taxes by 0.6 percent of GDP, according to a Washington Post analysis of federal data.

Obama's legacy is not usually thought of as reducing taxes, but he did help to extend Bush's tax cuts. The legislation he signed at the beginning of 2013 not only made many of those cuts permanent, but also extended many provisions from the stimulus.

Doing so prevented a major increase in taxes, although whether that should be considered a tax cut is debatable. In total, that legislation was projected to reduce revenues by 1.8 percent of GDP relative to what would have occurred had Obama done nothing, The Post's analysis showed.

The analysis compared forecasts issued by the nonpartisan Joint Committee on Taxation at the time of the legislation, along with contemporaneous forecasts for GDP from the Congressional Budget Office.

Trump (planned)

The plan Trump put forward as a candidate would reduce revenues by 2.6 percent of GDP, according to an analysis from the nonpartisan Tax Policy Center. That would be less than the cuts that Truman saw through in 1945 as well as those that Reagan enacted in 1981, at least initially.

The president has said he will give more information about his plans with respect to taxes on Wednesday, although he seems to be maintaining at least one important feature of the earlier proposal. Trump has decided to reduce the rate on corporate income from 35 percent to 15 percent, The Post reported, a change that would reduce collections by about $2.4 trillion over a decade.