TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, July 11, 2018

The Fed: GOP Tax Cuts May Not Boost Economic Growth

Federal Reserve Bank of San Francisco, Fiscal Policy in Good Times and Bad:

Recent U.S. federal fiscal policy has taken a decidedly procyclical turn, driven primarily by the large and front-loaded tax cuts enacted by the 2017 Tax Cuts and Jobs Act. Many analysts have forecast large increases in GDP growth over the next two to three years as a result. However, recent research finds that the effects of fiscal stimulus on overall economic activity are much smaller during expansions than during downturns. This suggests these forecasts may be overly optimistic.

http://taxprof.typepad.com/taxprof_blog/2018/07/the-fed-gop-tax-cuts-may-not-boost-economic-growth.html

Gov't Reports, Tax | Permalink

Comments

The headline is misleading. The study says that the tax cuts are credited for boosting economic growth, but that the effects diminish as growth continues, affecting many forecasts. Likewise, studies show that penicillin becomes less effective after it has cured the infection.

Conclusion -- Recent U.S. federal fiscal policy has taken a decidedly procyclical turn, driven primarily by the large and front-loaded tax cuts enacted by the 2017 Tax Cuts and Jobs Act. ... This suggests these forecasts may be overly optimistic.

Posted by: Woody | Jul 12, 2018 9:30:30 AM