cy, to reduce marginal and personal income tax rates, was enacted in 1981 and phased in to work for the next four years. He fervently pushed through another tax reform into legislation in 1986 to reduce marginal tax rates even more. Reagan’s second initiative, targeted to help low income families who depended on federal aid, failed initially but did come about by his second term. By turning over most programs to the state governments, he was successful in reforming food stamp legislation, housing assistance, and the Aid to Families with Dependent Children (AFDC) program (Burtless 43). But what was the outcome of all this new legislation? For starters, the Tax Reform Act of 1986 was the most important change in the income tax system in over forty-five years. The act cut ten tax brackets, from fourteen to four, out of the system and reduced marginal tax rates across the board at an average of 25%. It also reduced the marriage penalty and construed the tax rate to be more regressive. The manipulation worked. The labor supply grew substantially, with men working over 4% more annually and women over 3.5% annually (Burtless 57). The unemployment rate during the administration rose 1.9% from the previous decade, barely offsetting the effects of the income tax policy and the public assistance transfer policies. The result of all the policies and programs did produce a modest increase in the labor supply, though not nearly as high as President Reagan had intended (Burtless 62).Morris 11(De) Regulatory Reform and a Free Market IdeologyRonal Reagan passionately stated that government involvement in the free market should be absent, making sure the market remained “free” from restraint. He started in the right direction. Early in 1981 Vice President George H. Bush led a task force on regulatory relief. Sixty days of suspended regulations followed so the task force could review policies throughout the country. The pr...
