Reagan Tax Cuts
Definition
The Reagan Tax Cuts, officially known as the Economic Recovery Tax Act of 1981, were a series of reductions in income tax rates and business taxes enacted during the presidency of Ronald Reagan.
Analogy
Think of the economy as a garden. If you're a gardener (the government), you might decide to water less (cut taxes) to encourage plants (businesses and individuals) to grow deeper roots (invest more and stimulate economic growth).
Related terms
Supply-side Economics: This is an economic theory that argues lower taxes lead to increased work, saving, and investment, which then leads to overall economic growth.
Trickle-down Theory: This is an economic idea suggesting that benefits for the wealthy trickle down to everyone else in society. It's often associated with policies like tax cuts for businesses and high-income earners.
Reaganomics: This term refers to the economic policies promoted by U.S. President Ronald Reagan during the 1980s, which primarily consisted of large tax cuts.
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