IDEAS home Printed from https://ideas.repec.org/p/gea/wpaper/4-2011.html
   My bibliography  Save this paper

Marginal tax rates, tax revenues and inequality. Reagan’s fiscal policy

Author

Listed:
  • Elena Briata

    ()

Abstract

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.

Suggested Citation

  • Elena Briata, 2011. "Marginal tax rates, tax revenues and inequality. Reagan’s fiscal policy," DEP - series of economic working papers 4/2011, University of Genoa, Research Doctorate in Public Economics.
  • Handle: RePEc:gea:wpaper:4/2011
    as

    Download full text from publisher

    File URL: http://www.dep.unige.it/RePEc/gea/wpaper/dwpo-4-jul2011.pdf
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    as
    1. Feldstein, Martin, 1986. "Supply Side Economics: Old Truths and New Claims," American Economic Review, American Economic Association, vol. 76(2), pages 26-30, May.
    2. 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.
    3. Joel Slemrod & Jon Bakija, 2000. "Does Growing Inequality Reduce Tax Progressivity? Should It?," NBER Working Papers 7576, National Bureau of Economic Research, Inc.
    4. Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
    5. 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;National Tax Journal, vol. 42(1), pages 1-13, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Reagan’s fiscal policy; supply-side economics; revenue; inequality;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: http://edirc.repec.org/data/ifgenit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.