[2] Representative Jack Kemp and Senator William Roth, both Republicans, had nearly won passage of a tax cut during the Carter presidency; however, President Jimmy Carter feared an increase in the deficit and so prevented the bill's passage.

Critics of the act argue that it worsened federal budget deficits, while supporters credit it for bolstering the economy during the 1980s.

[13] Representative Jack Kemp and Senator William Roth, both Republicans, had nearly won passage of a major tax cut during the Carter presidency, but President Jimmy Carter prevented the bill from passing out of concern about the deficit.

[17] Throughout 1981, Reagan frequently met with members of Congress and focused especially on winning the support from conservative Southern Democrats.

One columnist wrote that Reagan's legislative success represented the "most formidable domestic initiative any president has driven through since the Hundred Days of Franklin Roosevelt".

[21] Reducing the tax liability would put more cash into the pockets of business owners to promote investment and economic growth.

[23] The most lasting impact and significant change of the Act was indexing the tax code parameters for inflation,[20] starting in 1985.

[12] Inflation was particularly high in the five years preceding the Act, and bracket creep alone caused federal individual income tax receipts to increase from 7.94% to over 10% of the GDP.

[24] Even after the Act was passed, federal individual income tax receipts never fell below 8.05% of the GDP.

[31] The non-partisan Congressional Research Service (in the Library of Congress) issued a report in 2012 analyzing the effects of tax rates from 1945 to 2010.

It concluded that top tax rates have no positive effect on economic growth, saving, investment, or productivity growth; however, the reduced top tax rates increase income inequality:[32] In the words of Thomas L. Hungerford, "The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth.

[34][20] Reagan came into office with a national debt of around $900 billion, high unemployment rates, and public distrust in government.

The Act was designed to give tax breaks to all citizens in hopes of jumpstarting the economy and creating more wealth in the country.

By the summer of 1982, the double-dip recession, the return of high-interest rates, and the ballooning deficits had convinced Congress that the Act had failed to create the results for which the Reagan administration had hoped.