Reagan Tax Cuts: Ten Years Later

A number of economists and administration officials discussed the legacy of the Reagan administration’s Economic Recovery Tax Act, which reduced income taxes 25 percent for all tax brackets upon its ratification by Congress in 1981. Originally intended to spur an economic recovery by encouraging savings and investment, critics of the act question whether the legislation encouraged government spending resulting in a huge federal deficit. The CATO Institute’s forum examining the legacy of the Economic Recovery Tax Act was entitled, “Reagan Supply-Side Tax Cuts After Ten Years: Economic Miracle or Voodoo Economics?” Supporters of the legislation pointed to the longest peacetime economic expansion in U.S. history, and questioned whether the deficit was caused by the tax cuts. Opponents discussed the federal deficit, the legacy of which will dominate federal economic policies for a long time to come. close