According to ChainCatcher news, a report from the nonpartisan fiscal oversight organization 'Committee for a Responsible Federal Budget' (CRFB) warns that extending the tax cuts set to expire next year will have almost no positive effect on economic growth.
The CRFB's findings are based on an assessment by the Congressional Budget Office, which found that allowing tax cuts to expire would significantly increase public revenue, reducing the cumulative fiscal deficit by $3.7 trillion over ten years. This potential revenue growth would mean less public borrowing, which in turn would stimulate private investment.
In the analysis by the Congressional Budget Office, this will help offset the labor force reduction caused by the expiration of tax cuts. The Congressional Budget Office stated, 'Overall, these two effects largely offset each other, resulting in very little change in Gross Domestic Product (GDP).'
This means that, in the view of the CRFB, extending the tax cuts would also have a similar, modest net effect on economic growth.