THE RISE OF POLITICAL CONSERVATISM 1980 1992
REAGANOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Raise taxes
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Cut taxes
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Either A or B
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None of the above
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Detailed explanation-1: -ERTA reduced the highest tax rate from 70 to 50 percent and reduced the lowest tax rate from 14 to 11 percent.
Detailed explanation-2: -Under ERTA, marginal tax rates dropped (top rates from 70% to 50%)and capital gains tax was reduced from 28% to 20%. Revenue from capital gains tax increased 50% from $12.5 billion in 1980 to over $18 billion in 1983.
Detailed explanation-3: -There are two main economic effects of a tax: a fall in the quantity traded and a diversion of revenue to the government. A tax causes consumer surplus and producer surplus (profit) to fall..
Detailed explanation-4: -President Eisenhower fought his own party to keep the highest tax rate at an astounding 90%, but President Kennedy finally lowered it to 70% upon taking office.
Detailed explanation-5: -Income tax has a direct effect on individuals and their saving and investment behaviour. On the other side, tax revenues should be placed in productive investments. With the spending, the government can promote inclusive growth, equality and efficiency in the economy.