An economic theory positing that tax cuts, deregulation, and other supply-enhancing measures can stimulate economic growth. It argues that by reducing barriers for producers, such as lower taxes on corporations and capital gains, businesses will be incentivized to increase production, creating jobs and ultimately boosting the overall economy. For example, reducing the corporate tax rate might encourage companies to invest in new equipment and expand operations, leading to increased output and employment.
The perceived benefits of this approach include potential increases in overall economic output, job creation, and increased tax revenues in the long run. Historically, proponents have argued that it can lead to a more efficient allocation of resources and a more competitive economy. However, critics argue it often disproportionately benefits the wealthy and may lead to increased income inequality and budget deficits if government spending is not also addressed. Its implementation has been observed in various forms in different countries, with varying degrees of success and impact.
