Trickle-Down Economics Writing Activity Notes

Trickle-Down Economics

• if you tax less the businesses and the wealthy, then that should make it easier for them to invest and create businesses

• A term used to criticize Supply-side economics,

Reaganomics

• the economic policies created by President Ronald Reagan

• The four main ideas of Reaganomics

  o Reduce the growth of government spending

  o Reduce the federal income tax and capital gains tax

  o Reduce government regulation

Supply-side Economics

• The technical term for “Trickle-down Economics”

• Used by President Ronald Reagan

• Tax cuts for the rich would influence the rich to invest more

Tax Act of 1981

• Also known as “Kemp–Roth Tax Cut”

• slashed the highest income tax bracket from 70% to 50%.

• Enacted by US President Ronald Reagan.

• The Accelerated Cost Recovery System (ACRS)

The Accelerated Cost Recovery System (ACRS)

• a depreciation method for assets with the goal of providing tax breaks.

• Part of the Tax act of 1981

The Tax Act of 1986

• Made law by President Ronald Reagan

• lowered the top personal income tax rate from 50 percent to 28 percent, Simplify the income tax code, Broaden the tax base and take away many tax shelters, etc.

The current tax rates for each earning bracket

10% for $0 - $11,000

12% for $11,001 - $44,725

35% for $231,251 - $578,125

37% for $578,126 - and up

The wealth owned by each earning bracket in the US.

Bottom 50% - 2.5% share of wealth

50-90% - 30.5% share of wealth

90-99% - 36.6% share of wealth

99-99.9% - 16.8% share of wealth

Wealth Tax

• a tax on an entity's holdings of assets or an entity's net worth.

• Also called a capital tax or equity tax

• Taxes the wealth of the richest Americans