NCPA - National Center for Policy Analysis


January 5, 1996

Eighty-two Republican members of Congress recently signed a letter to the President, House Speaker Gingrich and Senate Majority Leader Dole pleading that congressionally-approved tax cuts remain in the final budget deal.

Politics aside, the cuts are vitally important to the country's fiscal and economic future.

  • Without the vibrant economy which the cuts would help ensure, government revenues would dry up and the long-sought balanced budget would disappear.
  • Many economists are forecasting economic growth this year of less than 2 percent and the word "recession" is increasingly heard.
  • Economists point to the effects of the tax increases of 1990: an economic downturn which reduced government revenues, boosted federal spending and increased the deficit.
  • At the state level, the 25 lower-taxed states experienced an economic growth rate almost one-third higher between 1965 and 1992 than the 25 higher taxation states -- according to a new study.
  • That difference translates to about $9,000 per family of four in 1993 dollars.
  • A 50 percent reduction in the capital gains tax would release more than $1 trillion now locked up in laggard stocks.
  • Releasing that amount would add more than $80 billion to the nation's gross domestic product over seven years.

As the Republicans said in their letter, " relief package must not be sacrificed at the altar of more spending and a bigger government."

Source: Editorial, "Don't Sell Out the Tax Cuts," Investor's Business Daily, January 5, 1996.


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