Saturday, January 10, 2009

Effective Tax Cuts

Tax cuts stimulate the economy when they involve reductions in tax rates.

The reduction in rates improves incentives for savings, investment, business creation and expansion, job creation, entrepreneurship, and work, by allowing people to keep a greater percentage of the reward produced by these activities. This improves the economy not just by the dollar amount of the tax cut.

The improved incentives affect every economic decision and every dollar in the entire economy.

The astoundingly successful Reagan tax cuts in the 1980s, as well as the astoundingly successful Kennedy tax cuts of the 1960s, were both based on reducing tax rates, and were successful for these reasons.

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