The report lists six positive benefits of rate reductions and they are summarized below. Labor Supply . A lower rate makes a visible increase in take home pay. That increase provides more incentive to work overtime, get a new or better job, or delay retirement.
More work is the foundation of greater economic growth.
High rates are doubly devastating for savings because not only is your money taxed when you earn it, it is taxed again when you save it. In fact, there are many layers of taxes on income. In contrast, you are only taxed once if you spend money. Only major reform of the tax code will completely solve this problem. However, lower rates ease the tax bite and encourage households to save.