A Study Looking at the Effects of Tax Reform on Busines Investment During the Reagan Years
Higgins, William D.
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The purpose of this paper is to examine the impact that tax reform had on business investment during the Reagan era. It discusses the two main tax reforms of that era, the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986. This era of tax reform was revolutionary for the fact that it was so different from the past. It contained legislation that had not been seen before. As a result, the impact of these reforms was very difficult to predict. This paper examines the microeconomic implications of tax reform on business investment and how the predicted and actual outcomes turned out to be very different from each other.