Daniel J. Amirata
10 November 2014
The Effect Reaganomics had on American Citizens
Thesis: Though Ronald Reagan's economic policies were profoundly successful toward the economy; nevertheless, a wealth gap was created between the upper class and lower class because the wealthy prospered while the middle/lower class American citizen's income maintained the same.
When Ronald Reagan first introduced his economic policies of "supply side economics", he had good intentions to better the economy and make all citizens benefit from this. These economic policies did indeed end up immensely growing the economy, boosting the stock market, and lowering inflation. However, as the greater tax cuts for the wealthy and for businesses made them richer, they could not only have more money but inject it into the economy, such as stocks, the incendiary Wall Street, money in savings account that increased due to lower inflation, and growing businesses all were ways they could get even more rich.
On the other hand, the poor were already getting less tax cuts, and most of them strictly relied on wages to survive. The "trickle down" effect could not effectively reach the lower class because of this.
Economic Recovery Tax Act of 1981 passed by Reagan was a federal law enacted in the United States. This was to stimulate economy, supposing that lowering income tax will inject more money into the economy.
This tax act's incentive was an initial effort my Ronald Reagan to produce a statement for the feeble economy coming out of the 1970's. The oil shocks of 1973 and 1979 added to the already rising inflation in America. As a result, United States industries production declined as a whole.
The inflation rate from 1970 through 1979 was 7.06%; compared to the average of 2.5% through the previous decades in the...