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The Tax Trade-Off

by Ramesh Ponnuru

A better tax code could be worth a larger deficit

Since the late 1970s, Republicans have been the party of tax cuts. During this period, successful tax-cut proposals — those that have made it into law — have always combined two kinds of reforms. They have cut tax rates to increase incentives to work, save, and invest. And they have reduced tax bills for middle-class families, typically by granting tax relief to parents.

The tax cut advancing through Congress now, and especially its Senate version, fits within this tradition of marrying populism to supply-side economics. If it is enacted, it should yield a modest, immediate increase in take-home pay for tens of millions of people and a modest, long-term boost to growth for the whole economy.

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