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NEW EVIDENCE THAT THE 2001 AND 2003 TAX CUTS HAVE ONLY MODEST ECONOMIC EFFECTS AND DO NOT PAY FOR THEMSELVES

By Press Release  Posted by Amanda Lang (about the submitter)     Permalink    (# of views)   No comments

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A new analysis by the Congressional Budget Office finds that extending the 2001 and 2003 tax cuts could result in a modest increase in the number of hours that people work. However, any “dynamic” revenue gains associated with the resulting increase in wages and salaries would pale in comparison with the cost of extending the tax cuts.

CBO's analysis adds to the growing literature showing that tax cuts can have a modest positive impact on economic performance if they are paid for. But, it also adds to the growing literature showing that even under the best of circumstances, the additional revenue generated by economic activity stimulated by tax cuts offsets only a small percentage of the revenue loss that the tax cuts cause. If tax cuts are deficit financed, the net long-term economic effect could actually be negative, and the revenue losses could be larger, rather than smaller, than the static revenue estimates indicate.

http://www.cbpp.org/4-13-07tax.htm
http://www.cbpp.org/4-13-07tax.pdf 2pp.


Michelle Bazie
Deputy Director of Communications
Center on Budget and Policy Priorities
820 First Street, NE, Suite 510
Washington, DC 20002
http://www.cbpp.org
bazie@cbpp.org
Support the Center's Work:
http://www.cbpp.org/donate.htm

 

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OpedNews volunteer from 2005 to 2013.

Amanda Lang was a wonderful member of the Opednews team, and the first volunteer editor, for a good number of years being a senior editor. She passed away summer 2014.

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