In the 1980s, President Ronald Reagan argued that high tax rates distorted economic incentives to work and save. In the 1990s, President Bill Clinton argued that the rich were not paying their fair share of taxes. Which of the following statements best summarizes the economic theories behind the differing philosophies?

Question

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Reagan focused on how high marginal tax rates could disincentivize work and saving, reflecting a concern with the economic distortions caused by taxation. Clinton's focus on the rich not paying their fair share reflects a concern with vertical equity, or the principle that taxpayers with a greater ability to pay taxes should contribute a larger amount.

In the 1980s, President Ronald Reagan Argued That High Tax