The Response: To curb the rampant inflation from the 1970s, Paul Volcker, chairman of the Federal Reserve, severely increased federal funds rates, leading to equally steep interest rates, essentially inciting a recession intentionally to prevent inflation from growing beyond control. To pull the economy out of this manufactured recession, President Reagan ordered a series of tax cuts, the Economic Recovery Tax Act of 1981, which provided a 25 percent decrease in the personal marginal tax rate, and later supplemented the law with the Tax Equity and Fiscal Responsibility Act of 1982, which temporarily increased specific corporate taxes.
Kyle A. Richardson is the editorial director of Promo Marketing. He joined the company in 2006 brings more than a decade of publishing, marketing and media experience to the magazine. If you see him, buy him a drink.