Tax Issues

Growing Support For A Tax Cut

A new report from the U.S. Census Bureau highlights once again the need for a major tax cut this year. According to the report, the average household paid $9,445 in federal income taxes in 1997, more than twice what it paid in 1981. Even adjusted for inflation, the federal income tax take has risen by more than $1,700.

For this and other reasons, a number of groups and individuals are expressing support for a tax cut:

• On December 22, the National Association of Manufacturers called for a 10 percent reduction in income tax rates for individuals and corporations -- which it estimates would raise the gross domestic product by $167 billion by 2002, thus recouping much of the revenue loss.

• Former Federal Reserve Board Governor Larry Lindsey believes the Fed has done all it dare do to stimulate the economy, and that further interest rate cuts must be coupled with a reduction in the tax burden.

• Business Week magazine, which strongly opposed the Reagan tax cut in 1980, has also endorsed a tax cut this year to sustain eroding corporate profits and increase incentives for work and saving.

• The liberal Jerome Levy Economics Institute -- which looks at revenue surpluses from the viewpoint of Keynesian economics -- believes surpluses of the magnitude being forecast will lead to a recession, and although it would prefer to reduce the surpluses through higher spending, a tax cut would be better than doing nothing.

For more on Current Tax Legislation http://www.ncpa.org/pi/congress/cong2.html