Memo To House Republicans: Following Reagan’s 1982 Tax Increase, Economy Boomed, Unemployment Fell

Looking at real gross domestic product, it grew 4.5 percent in 1983 and 7.2 percent in 1984 – an exceptionally strong performance. The stock market had one of its best years ever in 1983 – both the Dow Jones Industrial Average and the S&P 500 Index rose 35 percent. There was no increase in the rate of inflation, which was exactly the same in 1983 and 1984 as it was in 1982. The unemployment rate fell from 10.6 percent in December 1982 to 8.1 percent by December 1983 and 7.1 percent in December 1984.

The 1982 tax increase is the largest peacetime tax increase in U.S. history. And the same thing happened around President Bill Clinton’s 1993 tax increase: dire warnings from Republicans about economic Armageddon, followed by a booming economy.