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In the 80's, Reagan's tax cut deal with Congress was trading reductions in marginal tax rates for elimination of a long set of deductions, predominantly tax shelters. Everyone remembers the former and not the latter :-)

Part of the economic growth after that was surely the shift in investment from tax shelters to much more productive investments.



There are simpler factors to explain the good economic growth 1982-1988: a big drop in inflation (engineered by Fed chair Paul Volcker) and a drop in the price of oil (mainly just luck). There was also a lot of deficit spending. Reforms in the 1981 and 1986 tax bills may have been helpful on the margin, but they're small compared to economic fundamentals.




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