1. Supply Side Economics
Does this really work?

2. The purpose
of Income Taxes

3. The Laffer Curve
Illustrates the amount of revenue Government collects is a function of tax rate
When tax rates are very high:
an tax rate => tax revenues

4. Supply-Side Economics
Orthodox macro theory consists of demand-oriented theories
they failed to explain stagflation (late 1970s)
Supply-side economists believe the problems were high rates of taxation & heavy regulation:
This had reduced the incentive to work, save and invest.
What was needed was not a demand stimulus
Incentives are needed to stimulate supply.
What is
De-regulation?

5. Supply-Side Policy
Goal of a supply-side policy is to shift the aggregate supply curve to the right
The supply-side toolbox has several tools:
Tax cuts to stimulate work effort, saving, and investment
Deregulation to reduce production cost/stimulate investment.
Expenditures on education training/research expands capacity to produce
Immigration policies alter the size/skill of labor force

6. Graphing Supply Side Economics

7. Evaluating Supply-Side Economics
Among the criticisms of supply-side economics is that it is unlikely a tax cut would substantially increase the supply of labor.
When households receive a higher after-tax wage, they might have an incentive to work more, but they may also choose to work less.

8. Supply-Side Policy Milestones

9. End
For more information see the Supply Side reading on my website

10. Supply-Side Policy Milestones

11. Supply-Side Policy Milestones

12. Supply-Side Policy Milestones