Econ 101: How Do Tax Cuts Work?

Despite the media’s portrayal, tax cuts ‘for the rich’ aren’t bad – and they boost the economy.

By Gary Wolfram, Ph.D.
Free Market Project

The recent economic expansion in the United States – bolstered by news of 2 million jobs created in 2005 and an unemployment rate below 5 percent – is in large part due to the 2003 tax reduction. Tax cuts create economic growth. There is little doubt that this is the case, both at the national and local levels. Let’s look at how they’ve worked through history. Read on.