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    Corporate tax rate cuts and capital gains tax rate cuts are the best economic stimulus


    Corporate tax cuts don’t incentivize production -- demand does

    A January 2008 report from the nonpartisan Congressional Budget Office says that "a reduction in the corporate tax rate" is "not a particularly cost-effective method of stimulating business spending" because "[i]ncreasing the after-tax income of businesses typically does not create an incentive for them to spend more on labor or to produce more, because production depends on the ability to sell output."

    Regarding the capital gains tax rate, according to a 2003 Congressional Research Service report: "A capital gains tax cut appears the least likely of any permanent tax cut to stimulate the economy in the short run; a temporary capital gains tax cut is unlikely to provide any stimulus." The CRS also wrote, "There are reasons to expect that capital gains tax cuts would have the smallest stimulative effect on the economy of virtually any fiscal stimulus option."