The Congressional Budget Office has released a report on various options for stimulating the economy, including cutting personal and corporate taxes.
The report, "Options for Responding to Short-Term Economic Weakness," outlines several approaches to reducing personal taxes, including a lump sum rebate, a temporary tax reduction, a payroll tax holiday, and the deferral or elimination of scheduled tax increases.
The report noted that it took about 10 weeks to issue tax rebates in 2001 when another stimulus was needed. "Because it is currently tax-filing season and the IRS is currently processing returns, it may not be possible to issue tax rebates based on 2007 returns until toward the end of the second quarter at the earliest," said the report. "Basing the rebates on 2006 tax returns could speed the initiation of the process but would increase the number of recipients whose addresses and circumstances have changed."
For businesses, the CBO looked at cutting the corporate tax rates, providing incentives for new investment, and offering operating losses and carryback provisions. The CBO also examined spending proposals such as direct transfer payments to households, as well as ways to fix the home mortgage market, including government purchases of subprime mortgages.
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