Should the Us Increase the Top Marginal Tax Rate

Should The US Government Increase Taxes on the Wealthy?

University of Phoenix

BCOM/275

SHOULD THE US GOVERNMENT INCREASE TAXES ON THE WEALTHY?

Introduction

In 1981 Ronald Reagan was inducted into Presidency of the United States. While campaigning and throughout his Presidency, Reagan turned millions of Americans into believers of his economic policies: millions of people that hoped to someday achieve the proverbial ‘American Dream’ of prosperity through hard work. His idea was to decrease tax rates for the wealthy and corporations under the premise that doing so would increase jobs and therefore, tax revenues – a sort of positive slippery slope effect. Reagan pledged that his ideology would have a positive economic impact because tax breaks for everyone would give them more money to spend and limit taxation on goods, making products more attainable. He also pledged to reduce government spending to limit the damage to the federal debt. Before Reagan was elected President of the United States, one of his opponents in the republican primaries criticized his ideology, giving it another name. The man, who later became known as Vice President George H. W. Bush, referred to Reaganomics as “Voodoo Economics” (zfacts.com, 2010) and for good reason.

Why Reaganomics and the Bush Tax Cuts Don’t Work

Ronald Reagan delivered a presidential address two weeks after his inauguration in 1981 stating “the federal budget is out of control”, adding “since 1960… our debt has grown by $648 billion” (Pethokoukis, 2011). Reagan used unsound data to convince American citizens to fear the rising cost of government spending even though the national debt to income ratio was lower than it had been in the previous 50 years (zFacts, 2011). And even though he explained the increase in government debt in the same address by stating that increases in population throughout his own presidency would result in increases to the federal budget (Pethokoukis, 2011), Americans somehow failed...