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A meme showing the benefit to the wealthy offered by 'Reaganomics'
and the way in which the middle-class was tricked into supporting it.

Key Points:

  1. The term ‘Reaganomics’ (supply side economics) refers to the economic policies promoted by the U.S. President Ronald Reagan during his time in office (the 1980s).
  2. There were four main pillars to Reagan’s economic policy: Reduce the growth of government spending, reduce income tax and capital gains tax, reduce government interference in the economy and control money supply to reduce inflation.
  3. Ronald Reagan was viewed as an anti-tax hero, but raised taxes 11 times during his time in office.
  4. Reagan increased public spending, primarily on the Department of Defense. It from $267.1 billion in 1980 (4.9% of GDP and 22.7% of public expenditure) to $393.1 billion in 1988 (5.8% of GDP and 27.3% of public expenditure)[1]
  5. Reagan significantly reduced the maximum tax rate, which benefited the rich and lowered the top marginal tax rate from 70% to 50%. In 1986 he once again reduced the rate to 28%.[2]
  6. In 2006, the IRS's National Taxpayer Advocate's report stressed that the AMT (alternative minimal tax) as the single most serious problem with the tax code because of the shift in tax burden from the rich to the already poor.[3]
  7. Middle class family income grew by an average of $4,000 annually during Reagan’s time in office. This average had experienced no growth in the pre-Reagan years and experienced a loss of almost $1,500 in the post-Reagan years.[4]

Relationship to Liberal Economics

Reaganomics was an attempt at adhearing to classical liberalist economic policies. Policies that advocated for the government to not interfere with the economy(deregulation) and lower taxes on their citizens. These policies spread/solidified the ebb and flow of liberal economics to britain which shared similar economic policies with America at the time. The policy of lowering tax rates was also intended to encourage the investment of capital from affluent citizens back into their country's own economy. Thus economic growth would be achieved through investment.[5]


[1] Historical tables, Budget of the United States Government, 2006, table 6.1.
[2] "Effective Federal Tax Rates: 1979-2001". Bureau of Economic Analysis. July 10, 2007.
[3]National Taxpayer Advocate 2006 Annual Report to Congress-Executive Summary" (PDF). Internal Revenue Service. Retrieved 2008-07-29.
[4] Supply-Side Tax Cuts and the Truth about the Reagan Economic Record, by William A. Niskanen and Stephen Moore.
[5] Christison, Fielding, Harding, Meston, Smith, Zook, (2009). Perspectives of Ideology (pp. 220) Canada, Ontario: Oxford University Press.