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Argument: Tax rate reductions increase weekly spending for a sustained stimulation

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Supporting evidence

  • Congressional Budget Office. "Options for Responding to Short-Term Economic Weakness". January 2008 - "A variety of approaches have been suggested for reducing tax rates. Those approaches include temporary across-the-board cuts in income tax rates and a "payroll tax holiday" that would cancel employee payroll tax withholding during a specific interval. One general advantage of such proposals is that they increase weekly take-home pay, which tends to be spent somewhat more readily than lump-sum rebates."

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