In 1981, the US government passed a law that significantly lowered tax rates on high-income individuals.The premise was that high tax rates deter high-income individuals from working and investing, reducing the growth of the economy.This is an example of

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The 1981 tax law reflects the balance between efficiency and equality, which is the essence of the equality-efficiency trade-off. The government believed that by lowering tax rates on high-income individuals, they would be incentivized to work and invest more, which would lead to economic growth. However, this policy also resulted in increased income inequality.

In 1981, the US Government Passed a Law That Significantly