How Did Ronald Reagan's Tax Policies Affect The Economy

J. Estrella
Professor Robinson
AMH-2020
27 November 2017
Thematic Review #2
Reaganomics
Ronald Regan was born on February 6th 1911, he was an American Politician who became the 40th president of the united states in 1981. Ronald Reagan was a big influence on economic activity during the 80’s and 90’s of the 20th century his economic policy would create a prospering economy in the 90s. One of his most famous acts as president was signing the 1981 tax bill or known as the Economic Recovery Tax Act (ERTA). This act allowed a twenty-five percent cut in marginal taxes for people, which in theory would help the economy grow quicker through businesses and the people. consequences due to his tax cuts would increase the divide between the wealthy and poor, but also lead to augmentative economic growth.

In Public Law 99-514-OCT. 22, 1986, This tax cut allowed the low bracket going from 11% to 15% which would make their tax rate go up but the low class people would have to pay more taxes per year. He then lowered the top rate from 50% to 28%. This act would also require ordinary income and capital gains to be taxed at identical cost. This act would also affect government revenues, by boosting it up. Although, there were many upsides in Reagans Tax reforms there was a downside. Reagan had tripled the federal debt from $900 billion to 2.7 trillion. Reagan had increased executive’s take of federal earnings by 3%. Which before was 1.4%. Next, during Reagan’s presidency, Supply side economics or better known as Trickle side economics was created by an economist named Robert Mundell. His theory argues that economic growth can be created easily by lowering regulation and decreasing tariffs. The benefits to this theory would be that consumers will be able to use everything at a low cost and employment will