Tax Reduction and the Economy a Joint Economic Committee Study

The current tax system is counterproductive and biased against saving and investment. The tax system imposes large losses on the economy that reduce the economic welfare of households and businesses. The current level of taxation imposes additional costs of about 40 cents at the margin for each dollar collected in revenue. A reduction in the burden imposed by the tax system would make a significant improvement in the economic wellbeing of American households. Furthermore, if this surplus revenue is not returned to the taxpayers, it appears likely that most of it will be absorbed in federal spending increases.