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Econ 150 - Reagan, taxes

Econ 150 - Reagan, taxes - accelerated depreciation that a...

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President Reagan passed two major tax acts in the four years prior to the 84 election. The Economic Recovery Tax Act of 1981 sought to stimulate economic growth by cutting taxes across the board. This included Indexing of tax brackets to the inflation rate, and Lowering of Marriage Penalty tax, so that families with two working spouses could deduct 10% from the salary of the lower-paid spouse. The major cuts in income tax and incentives for small businesses and savings helped to bolster the economy. Subsequently, President Reagan passed the Tax Equity and Fiscal Responsibility Act of 1982 . TEFRA increased the tax received but not the tax rates. This was done by removing some of the tax breaks businesses received in the ERTA of 1981, such as the increase in the amount of
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Unformatted text preview: accelerated depreciation that a company could deduct. It also provided for increased penalties for noncompliance with tax laws. The overall tax rate decrease greatly influenced economic growth. Families kept more money in their pockets and therefore had greater purchasing power. There was in increased spirit of enterprise, leading to higher rates of growth in income, output and employment. Economic incentives for work, savings and investment were increased. Overall optimism in the economy was restored via the increased prosperity. As a result of the favorable economic conditions and perfectly timed fiscal policies, President Reagan’s approval rating soared to 68%....
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