The government is rumoured to be bringing forward tax cuts. Is that a good idea? Will people spend them? Do tax cuts count as Keynesian stimulus? Or is spending the only good kind of stimulus?
The government’s tax cuts are well understood, the only question is when they are going to make them. A major part of the plan is to get rid of two whole tax brackets, like so:
The 32% tax rate that applies to income earned between $37,000 and $90,000 and the 37% rate that applies to income between $90,000 and $180,000 would go. They would be replaced with a 30% tax rate.