The tobacco plant, Nicotiana tabacum. Public-domain photograph.
Reagan's 1981 tax law cut income tax rates, including the top rate from 70 percent to 50 percent.
If money is tight, a rate cut helps only if you have taxable income to cut.
If you are in the middle, a smaller withholding can be real money and still not match a high mortgage rate.
If you have savings, the lower top rate changes what an investment is worth after tax.
The Economic Recovery Tax Act of 1981 cut individual tax rates over three years and sped up write-offs for business investment.
Military spending was rising at the same time.
The annual budget deficit grew.
Source: Economic Recovery Tax Act of 1981.