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Howard Gleckman

From The Briefing Book

From the Briefing Book

How do taxes affect the economy in the long run?

December 20, 2015 by tpcwebsite

How do taxes affect the economy in the long run?

Primarily through the supply side. High marginal tax rates can discourage work, saving, investment, and innovation, while specific tax preferences can affect the allocation of economic resources. But tax cuts can also slow long-run economic growth by increasing deficits. The long-run effects of tax policies thus depend not only on their incentive effects but also their deficit effects.

Read more about How do taxes affect the economy in the long run?

What is the role of monetary policy in alleviating economic downturns?

December 20, 2015 by tpcwebsite

What is the role of monetary policy in alleviating economic downturns?

Economists view monetary policy as the first line of defense against economic slowdowns—the Federal Reserve can act faster than the president or Congress, and it is better equipped to judge the appropriate timing and magnitude of economic stimulus.

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How do taxes affect the economy in the short run?

December 20, 2015 by tpcwebsite

How do taxes affect the economy in the short run?

Primarily through their impact on demand. Tax cuts boost demand by increasing disposable income and by encouraging businesses to hire and invest more. Tax increases do the reverse. These demand effects can be substantial when the economy is weak but smaller when it is operating near capacity.

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