Supply-side economics centers on the idea that lower marginal tax rates increase peoples’ incentives to work. First articulated by economist Arthur Laffer in 1974, supplyside economics increases labor productivity by allowing workers to keep more of their added INCOME. This, in turn, increases taxable output and income, resulting in greater revenue for government. According to Laffer and his supporters, including politician Jack Kemp, economist Lawrence Lindsey, and former president Ronald Reagan, high marginal tax rates discourage workers. At the beginning of the Reagan administration (1980), the highest marginal tax rate on personal income was 70 percent, which meant that someone earning an extra $1,000 in this tax bracket would be allowed to keep only $300 of that extra income. Because the United States’ income-tax system is progressive, only higherincome taxpayers paid at the 70 percent marginal tax rate. Supply-side economists argued that these were the most productive members of the economy, and high marginal tax rates discouraged their productive activities. Reducing marginal taxes rates would result in flurry of new economic effort, expanding the economy and increasing tax revenues. By the end of the Reagan administration (1988), the rate had decreased to 28 percent. Opponents of supply-side economics note that decreasing the highest marginal tax rates benefits only the wealthiest Americans, reducing their taxes while lower- and middle-income workers receive no decrease in their taxes. Supply-side advocates respond that the increased economic activity provides new jobs and greater income to everyone, noting the increasing number of women who entered the workforce in the 1980s. Opponents of supplyside economics label this TRICKLE-DOWN ECONOMICS, in which the benefits might eventually flow to the rest of society after the wealthy got their tax cut. Supply-side arguments also influenced tax and economic policies in other industrialized countries. Sweden, long known for its high tax rates, cut the top rate from 80 percent to 56 percent. France, Britain, and Japan all cut their rates, concerned that high tax rates cause a national outflow of CAPITAL and high-income workers. During the 1990s, supply-side economics was largely discredited and held partly responsible for the massive increase in the national debt, which more than doubled during the Reagan years. Supply-side economists predicted doom when the Clinton administration raised the top marginal tax rate to 39.6 percent, but the economy continued to grow. With the election of George W. Bush on a platform of cutting taxes, supply-side economics again became a source of debate among economists and politicians.