Tax cuts are suboptimal compared to government spending, with contradictions in policy undermining potential benefits.
Author
Rahul Menon, Associate Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University, Sonipat, Haryana, India
Summary
Exploring the possible impact of income tax cuts on the macroeconomy, it is shown that it is a suboptimal policy as compared to government expenditure. Furthermore, the contradiction between tax cuts on personal income and tax cuts on corporate profits announced in 2019 is examined; a contradiction that has not been analysed by those praising the government’s recent budgetary policies.
Published in: Economic and Political Weekly
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