Tax cuts vs. tax rebates

Tax cuts vs. tax rebates

With everyone concerned about a recession (which we are not in), some in Washington have started talking about what the government should do to help strength the economy. Brian M. Riedl wrote a great article in today’s Washington Times entitled Tax cuts vs. tax rebates.

“With slower economic growth raising fears of a recession, Washington is abuzz with talk of economic stimulus plans.

President Bush may offer a stimulus package; congressional leaders are discussing a proposal centered on tax rebates. Tax rebates don’t stimulate the economy. Cutting tax rates does.

To explain, let’s take a step back. By definition, an economy grows when it produces more goods and services than it did the year before. In 2007, Americans produced $13 trillion worth of goods and services, up 3 percent over 2006.”

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