Number: RS22790
Title: Tax Cuts for Short-Run Economic Stimulus: Recent Experiences
Authors: Jane G. Gravelle, Senior Specialist in Economic Policy 
Abstract: Congress is considering an economic stimulus package that is likely to include individual tax cuts and business tax provisions. In recent years, several different types of short run fiscal stimulus measures have been enacted: an individual income tax rebate in 2001, a temporary investment incentive (bonus depreciation) in 2002, and dividend relief in 2003. The February 2008 stimulus included a rebate, bonus depreciation, and small business expensing. Recent analysis and empirical studies suggest the 2001 rebate was an effective stimulus, bonus depreciation had a limited effect, and, on theoretical grounds, dividend relief was unlikely to provide an effective stimulus. Although there was not much obvious evidence of an effect on consumption for the 2008, some preliminary evidence on the 2008 rebate suggests the rebate is effective.
Pages: 5
Date: January 9, 2009