What Would Ronald Reagan Do?

Bill Brown, a visiting professor of the practice of law at Duke University, says the Economic Recovery Tax Act of 1981 is the best model for getting America out of it’s economic mess. According to Duke, Brown thinks it “offers a blueprint for fiscal stimulus that would be far more effective than the stimulus package currently before Congress.”

Brown reflects on a similar time, when America was “plagued by slow economic growth, high interest rates and high inflation.” ERTA, he says, not only reduced tax rates, but established a powerful set of incentives to promote investment in income-producing ‘capital assets’ — plant, property, and equipment—but it also “resuscitated the Kennedy-era investment tax credit, which gave business partial reimbursement for the purchase of every new income-producing asset they acquired. And it added to this subsidy by allowing all those assets to be depreciated extremely rapidly under the new Accelerated Cost Recovery System.”

The effect was almost immediate, says Brown.