Social and Behavioral Sciences Commons^™

Determining The Consumption Effects Of Announced Permanent And Temporary Tax Cuts In Accordance With The Permanent Income Hypothesis, Aileen Liu

Honors Papers

For several years, economists have been debating how well Federal tax policy changes have performed in readjusting the economy. Tax change policies have been instituted periodically since World War II up to the very present. The goals sought by the legislators have varied. The tax cut policy in the Kennedy administration was set up to invigorate a recessionary economy. Under the Reagan administration, tax cuts are a tool to increase savings and investment. Part of the reason for the inconsistency in policy aims is due to the lack of consensus on how a tax cut will perform in a given …