In the past, when evaluating tax proposals, neither the Congressional Budget Office nor the Joint Committee on Taxation were permitted to factor in the effect of economic growth on tax revenue.
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The bigger problem, though, is the effect of fast economic growth coupled with a fixed exchange rate.
Mr. Sims: While economists have celebrated the incremental economic growth in recent years, the actual effect when you measure it at a company activity level, has been quite minimal.
However, the multiplier effect (the effect that a dollar of government spending has on economic growth) is 0%.
Would anybody seriously deny that the Reagan policies of the early 1980s had such a significant effect on economic growth and employment that they changed the growth trend line?
Another factor to consider is the effect of Chinese economic growth on the rest of the developing world.
In 2020 the bill will not yet have started to bite, and the estimate excludes its effect on economic growth.
Keynesians believe government spending is the path to economic growth, as opposed to an effect of same.
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By contrast, Malaysia, worried about the harmful effect of higher rates on economic growth and on the stockmarket, has failed to bite the bullet risking worse consequences later.
It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth.
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Slower economic growth would also make businesses and commercial establishments more reluctant to borrow, and the combined effect would reduce the growth in the total business loans outstanding.
All of this stimulus had the eminently predictable effect of boosting domestic demand, driving economic growth, and lowering unemployment.
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We have seen the effect of the alternative, the weak economic growth that we saw when giving huge tax cuts to the wealthy occurred in 2001 and 2003, and the result -- I mentioned this on the plane yesterday -- is rather extraordinary.
What is going to be the effect on the US GDP of strong global economic growth?
Although this plan does less than Mr McCain's to shift taxation from income towards consumption, the reduction of marginal tax rates could have a bigger effect on economic growth.
After all, to the extent that your program of comprehensive tax simplification and reductions translates into -- as you have put it -- a "refund" for every American who pays taxes, the effect will assuredly be to contribute to long-term economic growth.
The longer-term effect is that, unless he is blessed both with strong economic growth and with compliant cabinet colleagues, he will eventually have to find new taxes to raise.
Sooner or later, however, the effect of the strong pound should kick in, and curb exports and economic growth.
However, their effect on growth in the more-developed countries of the Organisation for Economic Co-operation and Development was statistically insignificant.
Thereafter, the low demand environment brought on by low-to-negligible economic growth and high levels of unemployment is expected to take effect and will likely lead to lower sales.
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