Transcription of September 2014 - Brookings
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September 2014 - Brookings
Effects of Income Tax Changes on Economic Growth William G. Gale, The Brookings Institution and Tax Policy CenterAndrew A. Samwick, Dartmouth College and National Bureau of Economic ResearchSeptember 2014 The authors thank Fernando Saltiel, Bryant Renaud, and Aaron Krupkin for research assistance and Leonard Burman, Douglas Hamilton, Diane Lim, Donald Marron, Eric Toder, and Kevin Wu for helpful comments. This publication was made possible by a grant from the Peter G. Peterson Foundation. The statements made here and views expressed are solely those of the authors. AbstractThis paper examines how changes to the individual income tax affect long-term economic growth. The structure and financing of a tax change are critical to achieving economic growth. Tax rate cuts may encourage individuals to work, save, and invest, but if the tax cuts are not financed by immediate spending cuts they will likely also result in an increased federal budget deficit, which in the long-term will reduce national saving and raise interest rates.
Jun 09, 2016 · raise the federal budget deficit.3 The increase in federal borrowing will likely reduce national saving, and hence the capital stock owned by Americans and future national income. In most economic ...
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