Marginal tax rates, tax revenues and inequality. Reagan’s fiscal policy
The aim of this paper is to provide an overview of Reagan’s fiscal Reform. It mainly involves an investigation of the legislative features of the Reform and of the underpinning economical theory. The study focuses on the impact of such a Reform on the economy. The paper comprises four main parts. The first part is devoted to the analysis of both Reagan’s fiscal policy actions in the 1980s and of the regulatory touch. In particular the first part investigates two main Laws, which reduced private marginal tax rates: the Economic Recovery Tax Act (1981) and the Tax Reform Act (1986). The second part introduces and analyses the so-called “Supply-Side Economics”, the main theory on which Reagan's Reform is based. Indeed the core of “Supply-Side Economics” was the “Laffer Curve” where tax rate cuts played a central role. The last two parts deal with the concrete effects of private marginal tax rate cuts. In particular, inequality and fiscal revenue. It also focuses on the criticisms against the Reform. Fiscal revenue is observed in a wider context. The paper first investigates the source of the deficits recorded during the 1980s. It relates these deficits to general government revenues and general government expenditures. Subsequently, general government revenues are broken down into their parts and the development of federal income tax revenue is carefully observed. Inequality is investigated through the Gini index. The paper touches briefly on the changes to the Gini index after Reagan’s two main fiscal Laws took effect. Furthermore, inequality is related to the progression of the tax system and then calculated through the Reynolds-Smolensky Index.
|Date of creation:||Jul 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +39 010 209 5223
Web page: http://www.dep.unige.it/Email:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Austan Goolsbee, 1997.
"What Happens When You Tax the Rich? Evidence from Executive Compensation,"
NBER Working Papers
6333, National Bureau of Economic Research, Inc.
- Austan Goolsbee, 2000. "What Happens When You Tax the Rich? Evidence from Executive Compensation," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 352-378, April.
- Don Fullerton & James B. Mackie, 1988.
"Economic Efficiency in Recent Tax Reform History: Policy Reversals or Consistent Improvements?,"
NBER Working Papers
2593, National Bureau of Economic Research, Inc.
- Fullerton, Don & Mackie, James B. III, 1989. "Economic Efficiency in Recent Tax Reform History: Policy Reversals or Consistent Improvements?," National Tax Journal, National Tax Association, vol. 42(1), pages 1-13, March.
- Joel Slemrod & Jon Bakija, 2000. "Does Growing Inequality Reduce Tax Progressivity? Should It?," NBER Working Papers 7576, National Bureau of Economic Research, Inc.
- Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
- Feldstein, Martin, 1986.
"Supply Side Economics: Old Truths and New Claims,"
American Economic Review,
American Economic Association, vol. 76(2), pages 26-30, May.
When requesting a correction, please mention this item's handle: RePEc:gea:wpaper:4/2011. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marcello Montefiori)
If references are entirely missing, you can add them using this form.