Tax Equity And Fiscal Responsibility Act Of 1982 - TEFRA

The Tax Equity and Fiscal Responsibility Act of 1982, a.k.a. TEFRA, passed to increase revenue for the U.S. in the early 80s. That meant federal spending cuts as well as tax increases.

TEFRA came right on the heels of ERTA, the Economic Recovery Tax Act of 1981. ERTA led to major tax cuts, which was cool for a hot sec...until it wasn’t. Incoming federal revenue was going down, and government spending was only increasing. Rut-roh. TEFRA put a break on ERTA by scaling back those income tax cuts, increasing corporate taxes a bit, closing tax loopholes, and adding some excise taxes, like on cigarettes.

Where ERTA was all fun and games (yay to fewer taxes), TEFRA was a reality check, making both corporations and individuals more accountable for their tax liability. Ultimately, TEFRA helped rein in the federal deficit.

Reagan, who signed TEFRA into law, wasn’t a fan. He’d rather be known as the anti-tax party guy with ERTA. Understandable. Regardless, the economy boomed after ERTA according to the Bureau of Economic Analysis. If only Reagan had known this in hindsight, he would’ve been more stoked about signing TEFRA into law.