Fill in the Blanks Sampo: Can Tax Cuts Stimulate the Economy?Online version Complete the text from the TED-Ed video by clicking on the listed words. by Marietta Chela 1 struggling income cuts combat trickle stimulating earnings policies lower justification stimulates counterproductive revenue limit accomplish decrease When President Ronald Reagan began his first term in 1981 , the US economy was . Unemployment rates were high and getting higher , and in 1979 , inflation had peaked at an all - time high for peacetime . In an effort to these issues , Reagan's administration introduced a number of economic policies , including tax for large corporations and high - income earners . The idea was that tax savings for the rich would cause extra money to down to everyone else , and for that reason , these are often referred to as trickle - down economics . From the 80s to the late 90s , the US saw one of its longest and strongest periods of economic growth . Median rose , as did rates of job creation . Since then , many politicians have invoked trickle - down theory as a for tax cuts ? but did these policies actually work , either in the sense of economic growth , or in terms of improving circumstances for Americans ? Would they work in other circumstances ? To answer these questions , the main things to consider are whether the impact of the tax cut on the government ? s tax is harmful , whether the money saved in taxes actually the economy , and whether stimulating the economy actually improves people ? s lives . The idea behind tax cuts is that if taxes are too high , people will be less willing to work , which would ultimately tax revenue . So at a tax rate , the government might actually gain more tax money that it can theoretically put towards improving life for its citizens , because people will work more when they get to keep more of their . Of course , there ? s a to how much the government can cut taxes : at a zero tax rate there is no tax revenue regardless of how much people are working . So while cuts from a very high tax rate might be fine , cuts from a lower tax rate might be , hampering the government's ability to crucial things .
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