Supply-side economics is a macroeconomic theory that contends that economic growth can be best created by tax and fiscal policy incentives that encourage investments in capital and the reduction of barriers to the production of goods and services. This theory focuses on lowering marginal tax rates resulting in the after-tax rate of return on work and investment. Hence, consumers benefit from a greater supply of goods and services at lower prices, while the investment and growth of businesses increase new job creations. This theory necessitates less government regulation and seeks a cause-and-effect relationship between lowering marginal rates on capital formation and economic expansion.

The term supply-side economics was coined by Herbert Stein, a former economic adviser to President Richard Nixon and popularized by a journalist, Jude ...