News Journal

What is the connection between tax cuts and economic recession?

As per the research paper released by top fed economist Gauti Eggertsson “tax cuts can deepen recession. “The reports considered mainly the sales and labor taxes. The economist reported that the government plans to increase production will be of no use when the demand of products in market is low.

A nominal cut in taxes may bring deflationary pressure on economy and cutting tax on payroll will make people to work more but there are fewer jobs in market and this will create negative effect on economy.