President Reagan's Economic Policy Analysis
The first was reducing the growth of government with its spending on both income tax front and capital gains taxes. (Longley, Mayer, Schaller, 2015) The second followed reducing inflation by controlling the growth of the money supply itself. The third issue focused on regulation of supplies and trade within the United States. President Reagan took the position of cutting taxes to companies so that they had more revenue to hire new workers. In this, jobs market would expand all while businesses would become larger have more room for more workers and more need for labor in the general public. President Reagan again foresaw this eventually would boost the economy and bring in for the revenue by creating a larger tax base in the long run. (Longley, Mayer, Schaller, 2015) The theory of supply-side economics was developed in 1979, by economists Arthur Laffer showing how tax cuts would stimulate the economy to the point where the tax base expanded. (IPA, 2015) Tax cuts meant more money for the consumers intern they would spend this money boosting economic growth for businesses. The business with boost in sales would need to hire more workers to handle supply and …show more content…
The top income tax rate hit 28% for individuals making $18,550 or more a year. (Henretta, Edwards, 2012) Anyone making less than that paid no taxes at all. President Reagan took into consideration inflation and based new tax brackets indexing them for such purposes. In 1980, the top tax rate was 70% for people earning over $180,000 a year. During his presidency America saw the %70 drop to 28% during his last year in office. (Kiernan, 2004) This was a tremendous weight off of the top tier income families. President Reagan also dropped corporate tax by 6% during his time in office. (Henretta, Edwards, Self, 2012) President Reagan through tax breaks and his economic policy was very much based on the supply-side economic approach. The presidents thought process was the economic growth from cutting business taxes would expand the jobs in the workplace environment growing to expand the tax base enough to replace any initial loss from tax cuts overall replacing government revenue from the taxes initially cut.
President Reagan attempted to tame inflation by shifting it from a fiscal policy to monetary. Other reductions seen within the government under Reagan 's control were spending and regulations on things such as oil, gas, cable, and overseas shipping. (Kiernan, 2004) Although, initially his policy helped inflation the rates that were put into place it begin to put a hardship on economic growth. For approximately 10 months