NCPA - National Center for Policy Analysis

Supply-Side Effects of Reagan Tax Cuts

October 13, 1996

Some liberal economists profess to be aghast at Bob Dole's bold plan to cut tax rates 15 percent. Other economists are applauding, comparing the economy's superior performance after the Reagan tax cuts with economic conditions after Clinton's tax increase.

  • The real economic growth rate during the 1980s was 3.2 percent per year, compared to 1.8 percent so far in the 1990s.
  • Real median family incomes rose $4,000 in the Reagan years, but have fallen $2,100 since the 1990 and 1993 tax increases.
  • The poorest fifth of Americans experienced a 6 percent gain in real income in the 1980s, but have suffered a 7 percent loss in the 1990s.
  • Federal revenues grew by 24 percent from 1982 to 1989, but will only increase by 20 percent over a comparable seven-year period from 1990 to 1997.

Some economic analysts conclude that any way one slices it, tax cuts have proven to be people- and voter-friendly.

Source: Stephen Moore (Cato Institute), "The True Reagan Record: One Last Time," Investor's Business Daily, August 13, 1996.


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