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Unformatted text preview: Tax Cuts or Tax Redistribution? When all was said and done, the total tax burden imposed on the American people from all sourcesstate and local taxes, federal income and capital gains taxes, and payroll taxes remained basically unchanged throughout the 1980s. In the end, Reagan's reputation as a tax- cutter far outran his actual performance. Reagan's tax policies did, however, redistribute the tax burden significantly, even if they failed to reduce it overall. By cutting income taxes, which are paid at a higher rate by the wealthy, while increasing payroll taxes, which are paid at a higher rate by the working poor and middle class, Reagan shifted the tax burden down the income scale. During the 1980s, the total effective federal taxation rate for the poorest one-fifth of American families actually increased by more than 16%. By contrast, the effective taxation rate for the wealthiest one-fifth of families fell by 5.5%, and the richest one percent of Americans saved even more: their tax rate fell by 14.4%.5....
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This note was uploaded on 01/04/2012 for the course AMH AMH2010 taught by Professor Pietrzak during the Fall '10 term at Broward College.
- Fall '10