Do Tax Cuts Stimulate The Economy? – Jonathan Smith

President Ronald Reagan took office in 1981 with a struggling US economy marked by high unemployment rates and a peacetime high inflation rate of 1979. To combat these issues, Reagan’s administration introduced trickle-down economics, including tax cuts for large corporations and high-income earners, with the idea that extra money from the rich would trickle down to everyone else. From the 80s to the late 90s, the US saw one of its longest and strongest periods of economic growth, with rising median income and job creation rates. However, the impact of tax cuts on the government’s tax revenue and the effectiveness of tax cuts in stimulating the economy and improving people’s lives has been debated. Tax cuts can harm tax revenue if they are too low and may only benefit the top 1% of people while having little effect on the economy as a whole, as seen in the case of Kansas. The effect of trickle-down economics is complex and unique to each time and place, making it difficult to deliver a definitive ruling on its success.