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ECONOMIC RECOVERY TAX ACT: Unofficially called the Kemp-Roth, this was a cornerstone of economic policy under President Reagan passed in 1981. The three components of this act were: (1) a decrease in individual income taxes, phased in over three years, (2) a decrease in business taxes, primarily through changes in capital depreciation, and (3) the indexing of taxes to inflation, which was implemented in 1985. This act was intended to address the stagflation problems of high unemployment and high inflation that existed during that 1970s and to provide greater incentives for investment. A primary theoretical justification is found in the Laffer curve relation between tax rates and total tax collections.
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MARKET FAILURES Imperfections in the exchange process between buyers and sellers that prevent markets from efficiently allocating scarce resources. Market failures come in four varieties -- public goods, market control, externalities, and imperfect information. Market efficiency is achieved if the value of goods produced is equal to the value of foregone production. Markets fail when this efficiency condition is not achieved. Such failures can only be corrected by government intervention.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time watching infomercials trying to buy either a video game player or an AC adapter that won't fry your computer. Be on the lookout for telephone calls from former employers.
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This isn't me! What am I?
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The average bank teller loses about $250 every year.
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"Most human beings have an almost infinite capacity for taking things for granted. " -- Aldous Huxley, writer
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IRPP
Institute for Research on Public Policy
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