Final answer:
The false statement is that corporate taxes were increased in Reagan's 1981 tax cut. Instead, the Economic Recovery Tax Act decreased individual and corporate tax rates, which were part of Reagan's supply-side economic policies.
Step-by-step explanation:
Regarding the statement about Reagan's 1981 tax cut, the false one among the provided options is that corporate taxes were increased. In 1981, the Economic Recovery Tax Act led to a significant reduction in individual income tax rates, reducing federal taxes by 25%, and indexing taxes to the cost of living to prevent inflation from pushing taxpayers into higher brackets. However, corporate taxes were not increased; they effectively decreased as part of the overall supply-side economic strategy that the Reagan administration adopted. This approach aimed to stimulate investment and economic growth by reducing the tax burden on businesses and individuals. In his second term, the Tax Reform Act of 1986 further lowered personal income tax rates, with the highest tax bracket reducing from 50 percent to 28 percent. It also reformed various aspects of the tax code, aiming to create a more simplified and equitable system. Despite these tax cuts, the disparities between the rich and poor increased, and the argument remained whether these policies effectively stimulated job growth and investment, especially within the United States.