According to supply-side theorists, the best way to make the economy grow and create jobs is by lowering marginal tax rates. This will provide the incentive for increased savings, investment, and production on both a national level as well as within individual states. The focus of their analysis is on stimulating demand through promoting growth in output and reducing unemployment. There are two basic tenets underlying this idea: (1) an increase in income leads to more economic activity which creates jobs because people have more money to spend;
and (2) lower taxes lead to higher levels of investment which generate greater productivity. Supply-Side Theory is a set of principles that address the state and size of an economy. It is based on two basic tenets: (A) increase in income leads to more economic activity which creates jobs because people have more money to spend; and (B) lower taxes lead to higher levels of investment which generate greater productivity. The theory emerged in contrast with Keynesian economics, as well as new classical macroeconomics, but it has been criticised for having no proof from academic research or evidence. The idea behind supply-side policy is that by lowering the marginal tax rates one can stimulate demand through promoting growth in output and reducing unemployment. Supply-side theorists believe this will provide incentives for increased savings, investment, and production on both a national level as well
