Cato White Papers and Miscellaneous Reports

Tax Cuts and Balanced Budgets: Lessons from the States

September 17, 1996

Stephen Moore and Dean Stansel

Stephen Moore is director of fiscal policy studies and Dean Stansel a fiscal policy analyst at the Cato Institute

Executive Summary

The states can serve as valuable "laboratories of democracy" on the issue of whether tax cuts can lead to higher economic growth and balanced budgets. This study examines the state experience with tax increases and tax cuts in the 1990s. We compare the economic and fiscal results in the 10 states that increased taxes the most with the results in the 10 states that cut taxes the most.

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