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Monday, October 02, 2006
Add this One to the Pile
...of reports that make the free lunch-"tax cuts pay for themselves" crowd look like the circus sideshow that they are.
Last week, CRS released a report* on the revenue effects of the "2001-2004 tax cuts." It found that:
Given the positive and negative effects, it is likely that the feedback effect in the very short run would be positive, but at the current time as the stimulus effects have faded and the effect of added debt service has grown, the 2001-2004 tax cuts are probably costing more than their estimated revenue cost.
So, there you have it - again: Sorry, kids, no free lunch.
The report is a lengthy technical discussion, though digestible by non-economists (like me), on various assumptions about economic growth and amount of growth that would be necessary to offset the revenue loss from tax rate cuts.
*This report is not widely available on the internet, but several pay-for-service sites, such as GalleryWatch.com and TaxAnalysts have it. The title of the report is "Revenue Feedback from the 2001-2004 Tax Cuts" and the Order Code is RL33672.
John Irons has the summary posted on CAP’s BudgetBlog.
Posted by Craig Jennings
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