1. The Case Against Tax Cuts
- Author:
- William G. Gale and Alan J. Auerbach
- Publication Date:
- 03-1999
- Content Type:
- Policy Brief
- Institution:
- The Brookings Institution
- Abstract:
- Emerging federal budget surpluses have sparked calls for large-scale tax cuts that would be irresponsible and counterproductive. Surpluses over the next ten years are based on optimistic assumptions regarding revenues and spending. Even if they do materialize, the surpluses will exist only because government accounting obscures the growing cost of future liabilities. The government faces a large, long-term deficit, and tax cuts would make this problem worse. The proposed 10-percent income tax rate cut would provide disproportionately large benefits to wealthy households and little to lower income households. It would have little effect on economic growth, but would impose higher burdens on future generations, and would reduce future budget discipline by violating the budget rules. Moreover, for most families, tax burdens are already at their lowest level in twenty years. Saving the surplus, by paying down public debt, would help the economy much more than would tax cuts.
- Topic:
- Government and Political Economy
- Political Geography:
- United States