PolicyBlog has moved!

Thank you for visiting, PolicyBlog has a new address.

Our new location is http://www.commonwealthfoundation.org/policyblog

Please adjust your bookmarks. Archived posts will remain here for now.


Wednesday, January 16, 2008

Tax Rebates Will Not Stimulate The Economy

Heritage Foundation commentary on why neither tax "rebates" nor "ecnomic stimulous" spending would result in economic growth.

Critics contend that rebates "inject" new money into the economy, increasing demand and therefore production. But every dollar that government rebates "inject" into the economy must first be taxed or borrowed out of the economy (and even money borrowed from foreigners brings a reduction in net exports). No new spending power is created. It is merely redistributed from one group of people to another. ...

Instead, the 2003 tax cuts showed that proper tax policy can encourage the working, saving and investment that fuel productivity and economic growth. Combined with proposals to reduce bureaucratic red tape and support free trade, tax rate reductions are the best way for Washington to remove barriers to economic growth.

No comments: