Obama talks about lower taxes than Reagan; GOP members roll their eyes

Republicans attending a White House meeting on Wednesday didn’t take kindly to President Obama telling them tax rates were higher during the Reagan administration.

GOP members engaged in a lot of “eye-rolling,” according to a member who was on hand to hear Obama, who invited House Republicans to the White House for discussions on the debt ceiling. The White House and Republicans are trying to reach a deal on spending cuts that could allow the $14.3 debt ceiling to be raised.

“[The President] made a comment like the tax rate is the lightest, even more than (under former President) Reagan,” Rep. Lee Terry (R-Neb.) told The Hill following the meeting.

House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) joked that during the meeting, “We learned we had the lowest tax rates in history … lower than Reagan!”

Obama has been pressing Republicans to agree to raise some taxes to close the deficit, but Republicans have been unwilling to budge. Debate has centered on wealthier taxpayers, with Obama pushing to raise tax rates imposed by President George W. Bush on taxpayers with income above $250,000 (families) and $200,000 (individuals) annually.

Republicans say the focus must be on spending cuts and entitlements.

Tax rates were higher for most U.S. taxpayers during much of Reagan’s presidency, though all individual taxpayers received a tax break under the 1986 tax reform law ushered in by Reagan.

In 1984, a 50 percent tax rate existed on income above $162,400 a year, although many taxpayers could find loopholes in the tax code to reduce their tax burden. Many of those loopholes were eliminated in the 1986 tax reform law signed by Reagan.

In the last year of Reagan’s presidency in 1988, there were two tax rates for individuals; a 15 percent rate for those making less than $17,850 and a 28 percent rate for those making above that level.

Today’s tax code includes six rates, with the highest tax bracket paying 35 percent on income above $379,150.

“We spent a lot of time talking about our differences that are significant and profound,” Issa said. Both sides often used the word “demagogue” in attacking the other side’s arguments for reducing spending while raising the debt ceiling.

Rep. Steve Scalise (R-La.) said that House Majority Whip Kevin McCarthy (R-Calif.) was quick to counter the president's claim on low tax rates.

"Quickly Kevin McCarthy followed up saying, actually, our corporate tax rates are the highest in the world and (President Obama) acknowledged that" U.S. corporate tax rates are higher than most other nations, Scalise explained.

"And that's a big deal," Scalise said, noting that the high rates "hurts American competitiveness and job creation - so the folks that are trying to earn money, get a job, so they can pay that 'low tax rate,' they can't even do that right now because we aren't competitive with the rest of the world."

This story was updated at 2:35 p.m.