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Do Tax Cuts Pay for Themselves?
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Issue
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| Contributor | RP |
| Last Edited | RP Jul 11, 2006 04:38pm |
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| Category | Analysis |
| News Date | Tuesday, July 11, 2006 09:30:00 PM UTC0:0 |
| Description | Not if you read the fine print in the new White House midsession review of budget trends. “While difficult to estimate precisely,” Treasury long-run analyses of the effects of President Bush’s tax cuts “may ultimately” raise total national output of goods and services by 0.7%.
“If new revenues equaled as much as 20% of the additional output, the increase in revenues resulting from making the tax cuts permanent (assuming Treasury’s best-case assumptions) would be $29 billion.”
That’s a lot of money. But how does it compare to the size of the president’s tax cuts? The congressional Joint Committee on Taxation, using conventional analyses, says making the president’s tax cuts permanent would reduce federal revenues in 2016 by $314 billion. That is more than 10 times what the Treasury analysis suggests tax cuts would generate by prompting more hours of work, more savings and investment and more efficient use of resources. |
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