Discuss the implications of a tax cut. How would this impact the US economy
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A tax cut means people have more money to spend on consumer goods. However, that doesn't mean that they will actually buy more goods. The statistics on tax cuts show that they don't have the desired effect on the economy.
Folks who pay less taxes either spend it, or save it. Those who save it, usually don't put it under their mattress or in a cookie jar, they put it in the bank, and the bank loans it out.
So, spend or save, a tax cut causes an immediate stimulus to the economy. The question really remains, who will finally pay the federal spending bill and when? Tax cuts mean less federal income to pay for the spending mandated, in the end, somebody has to pay.
So, spend or save, a tax cut causes an immediate stimulus to the economy. The question really remains, who will finally pay the federal spending bill and when? Tax cuts mean less federal income to pay for the spending mandated, in the end, somebody has to pay.
1 answer