Reaganomics Flashcards
What did Reagan set out to do in his 1980 presidential campaign?
Shift from LBJ’s Great Society, which he argued had led to high taxation. He vowed to fix the economy, lower taxes and reduce big government.
Why was the public view on the presidency poor prior to Reagan coming to power?
The US had lost its first major war against Vietnam, A number of oil crises had occurred and the 1974 Watergate scandal had destroyed trust in the presidency.
What are the 4 pillars of reaganomics?
Reduce Federal income and capital gains tax, Reduce federal spending, Reduce Government regulation, Tighten the money supply to reduce inflation.
What was the basis for Reagans economic policies?
Reagan was influenced by supply side economics, argued that the economy was not driven by consumer demand, but maintaining high production, high savings and investment.
What did Reagan believe tax cuts would cause?
It would revive the economy by encouraging people to work harder and therefore enable them to spend more of their hard earned money.
How much did Reagan plan to cut government spending by?
He wanted to reduce federal spending from $740bn dollars to just $40bn dollars. Attack on Great society
What two major bills did Reagan produce in his first 100 days?
ORA and ERTA
On what date was the Economic recovery tax act passed?
13th August 1981
What did ERTA do?
It cut income tax by 23% over a 3 year time period. It reduced the highest income tax band from 70% to 50%. Business taxes were also slashed to reinvigorate trade.
Who benefited mainly from ERTA and why?
Due to the nature of the tax cuts the richest received the biggest cuts proportionally as set out by Supply side economics. New innovative business’ were also offered tax breaks.
What does TEFRA stand for and when was it signed?
tax Equity and Financial Responsibility act, 3rd September 1982
What did TEFRA do?
It altered ERTA by raising taxes to a degree. Income tax and business rates remained low whilst taxes on cigarettes and telephones increased heavily. It also closed a number of loopholes that businesses had been exploiting.
What was the TRA and when was it signed?
The TRA was the Tax Reform Act and it was signed on 22nd October 1986.
What did the Tax Reform act do?
The top band of tax was once again cut from 50% to 38%. The number of tax brackets was reduced from 15 to 4. This meant that 6 million of the poorest Americans were exempt from tax. The Top band tax eventually fell to 33%. Low Income housing tax credits to the poor. Closed more tax loopholes including fraudulent child welfare claims.
Who did the Tax reform act benefit and why?
It benefited the most wealthy by reducing the upper tax bracket further, but also benefited the poorest in society by eliminating taxes for them and providing them with aid when providing homes.
