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Should The Congress of the United States have enacted what is now called the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This is an endless debate of facts, figures and various economic models. One on side, the so called “supply-siders”, and proponents of Reganomics argue that tax-cuts, even when largely benefited by only the top wealthiest in the nation, benefit all in the economy through what has been called the trickle down theory. In contrast there are some economists that think there is little to no benefit of a tax-cut. Also there are citizens who think that a tax-cut should benefit the lower class more so as not to widen the income gap any further, supported indirectly by economist who think that taxes affect demand, also known as Keynesian theory. “The basic belief of supply-side economics is that all aspects of economic behavior-such as labor supply, saving, and investment-respond to economic incentives and, in particular, to incentives in the tax code”[1]. While other economist site Ricardian equivalence to support their argument that tax cuts offer no benefit. “The empirical evidence on Ricardian equivalence is mixed”[1]. There is little argument that there should be some sort of tax relief in the current state of the economy. “Most Americans support Bush's tax-cut proposals. A USA Today/CNN Gallup poll yesterday showed the number rising to 67 percent, from 60 the week before. Yet polls also show a desire for more tax-cut benefits to go to lower-income taxpayers.” [2] The economy is currently in a recession and the government is running a surplus. The biggest argument is the fairness of an across the board tax-cut. This tax-cut is seen by many Americans to unfairly benefit the wealthiest in the nation. This paper shall make no attempt to claim that one economic theory is superior to another; such a task is too great for my limited knowledge. However this paper will present arguments from both sides of the ring with supporting empirical evidence and conclude with whether or not the congress should have passed the EGTRRA. The intent of this paper is to attempt to discover what is right, without partisanship and personal biases invading the topic. When President Bush took office the economy was stalling due to the large technology boom of the 1990’s.
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