![]() The Paycheck Protection Program and spending and transfer programs were also likely to have larger effects, although some of these demand-side stimulus programs that transferred incomes to individuals may be less effective due to the unique nature of the supply constraints in the current environment. Multiplier estimates from fiscal stimulus enacted during the Great Recession suggest that the most effective tax stimulus provisions in the recent legislation addressing the COVID-19 pandemic were likely the individual rebates, with business provisions having smaller effects. Multiplier estimates reflect these considerations. (Sales tax holidays may, however, be very difficult to implement.) The effect of business tax cuts is uncertain, but likely small for tax cuts whose main effects are through cash flow. While temporary individual tax cuts likely have smaller effects than permanent ones, temporary cuts contingent on spending (such as temporary investment subsidies or a sales tax holiday) are likely more effective than permanent cuts. However, studies of the 2001 rebate found that a significant amount of that rebate was spent. There is some weak evidence that tax cuts received in a lump sum will have a smaller stimulative effect than those reflected in paychecks, but this evidence is uncertain. Empirical evidence suggests individual tax cuts will be more likely to be spent if they go to lower-income individuals, making the tax rebate for lower-income individuals likely more effective than several other tax cuts. Many, but not all, tax cuts that were expiring after 2012 were extended permanently.Ī tax cut for stimulus is more effective the greater the fraction of it that is spent. ![]() In December 2010, along with an extension of expiring tax cuts, a temporary payroll tax cut was adopted. Both bills included individual tax cuts aimed at lower- and middle-income individuals, along with business tax cuts. 110-185) and a much larger one in February 2009 (P.L. In response to the Great Recession several types of tax cuts were debated as possible fiscal stimulus-with fiscal stimulus legislation enacted in February 2008 (P.L. This report discusses tax cuts enacted during the Great Recession, as well as those recently enacted and those under consideration. ![]() The economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic has led Congress to enact general fiscal stimulus in the form of tax cuts and spending increases.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |