Question

explain how supply side economics has led to lower relative taxes on higher earning citizens in America.

Answer 1

Supply side economic has led to lower relative taxes on higher earning citizens in America because a group of economists, journalists, and politicians formed or became adherents of a school of thought called “supply-side economics.” Its three most prominent economists were Arthur Laffer, then at the University of Southern California; Alan Reynolds, then at First National Bank of Chicago; and Paul Craig Roberts, a prominent staff member to various Republican congressional committees and, early in the Reagan administration, the assistant secretary of the Treasury for economic policy.

The journalist who was most committed to supply-side thought was the late Jude Wanniski, an editorial writer for the Wall Street Journal, and Jack Kemp, a Buffalo-area Republican congressman, was the group’s best-known politician. One other early supply-sider, an historian who became a bona fide economist, was Kemp’s aide Bruce Bartlett.

Their argument was basically an application of one of the most important principles in economics: incentives affect behavior. Specifically, they focused on the harm that high marginal tax rates inflict on an economy and the growth in an economy’s real output that can occur if the highest marginal tax rates are reduced.