To the delight of supply-siders, the law contained significant marginal tax rate reductions for individuals and corporations.
The view that the tax cuts would jump-start the economy was based on abundant economic literature examining how tax policy affects decision-making by businesses and individuals.
On the individual side, we expected that lower marginal tax rates would encourage people to re-engage in the workforce after years of lower or stagnant participation rates.
When tax rates go up, younger workers don't respond much, since they must consider the long-run benefit of giving up the future gains from having more experience.
We saw this exact pattern when President Obama hiked marginal tax rates, with labor-force participation dropping 0.7% after the tax increase for workers 35 to 44, but dropping 1.5% for workers over 55.
Supply-side economists have long argued that the best way to help lower-income Americans is to create a system in which they have more disposable income by cutting tax rates and creating incentives for more capital investment in American businesses and workers.
The 2017 tax reform and the data that continue to come in demonstrate decisively that this approach works.
https://www.wsj.com/articles/tax-reform-has-delivered-for-workers-11577045463
The view that the tax cuts would jump-start the economy was based on abundant economic literature examining how tax policy affects decision-making by businesses and individuals.
On the individual side, we expected that lower marginal tax rates would encourage people to re-engage in the workforce after years of lower or stagnant participation rates.
When tax rates go up, younger workers don't respond much, since they must consider the long-run benefit of giving up the future gains from having more experience.
We saw this exact pattern when President Obama hiked marginal tax rates, with labor-force participation dropping 0.7% after the tax increase for workers 35 to 44, but dropping 1.5% for workers over 55.
Supply-side economists have long argued that the best way to help lower-income Americans is to create a system in which they have more disposable income by cutting tax rates and creating incentives for more capital investment in American businesses and workers.
The 2017 tax reform and the data that continue to come in demonstrate decisively that this approach works.
https://www.wsj.com/articles/tax-reform-has-delivered-for-workers-11577045463
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