Study: government spending better for economic growth than tax cut

Economist Dean Baker (Co-Director of the Center for Economic and Policy Research) has run the numbers on the relative payoff of two economic stimulus proposals: increased government spending, or a cut in taxes.

The result? $100 billion of additional government spending will lead to 1 million additional jobs, while a temporary cut in payroll taxes will generate 860,000 jobs. By contrast, a $100 billion cut in corporate taxes will lead to just 200,000 new jobs.

The paper also projects that a $100 billion increase in spending will cause the overall unemployment rate to drop by 0.5 percentage points. A reduction in the payroll tax of the same size will lead to a 0.4 percentage point drop in the unemployment rate, while the same cut in corporate taxes will cause the unemployment rate to fall by just 0.1 percent.

See the full brief here – 2 pages, an easy read.

  • Leave a Reply

Your email address will not be published. Required fields are marked *

More To Read

February 15, 2019

Low Pay for Early Childhood Educators Hits Hispanics Harder

Early childhood educators make much less than K-12 teachers, and are twice as likely to be Hispanic

February 11, 2019

Countdown to Conception

How to Get the Most Buck for Your Bang with Paid Leave

February 7, 2019

Hiring Based on Previous Salary Perpetuates Inequality

HB 1696 and SB 5090 prohibit screening job applicants based on income history